HG 


MSD 


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'^NSURANCE  LAWS 


STATE  OF  TEXAS 


DIGEST  OF  192 


BY 


ED.  HALL 

COMMISSIONER  OF  INSURANCE  AND  BANKING 


VON  BOECKMANN- JONES  CO.,  PHISTEnd,  APSTIN,  TEXAS 

1922 


GIFT  OF 


INSURANCE  LAWS 


STATE  OF  TEXAS 


DIGEST  OF  1921 


BY 


ED.  HALL 

COMMISSIONER  OF  INSURANCE  AND  BANKING 


VON  BOECKMANN-JONES  CO.,  PRINTERS,  AUSTIN,  TEXAS 

1922 


A1-122-2000-L 


TABLE  OF  CONTENTS. 


PAGE 

Chapter  I — Commissioner  of  Insurance  and  Banking,  Sections  1-8.       5 

Chapter  II — Duties  of  the  Commissioner,  Sections  9-48 6 

Chapter  III — Incorporation  of  Insurance  Companies — Home  Com- 
panies, Sections  49-67 16 

Chapter  IV — Life,  Health  and  Accident  Insurance  Companies — 

Home,  Sections  68-120 19 

Chapter  V — Life,  Health  and  Accident  Insurance  Companies — 

Foreign,  Sections  121-131 42 

Chapter  VI — Investments  and  Premium  Eeceipts  Taxes  on  Life 

Insurance  Companies,  Sections  132-148 46 

Chapter  VII — Assessment  or  Natural  Premium  Companies,  Sec- 
tions 149-151  _ 54 

Chapter  VIII — Mutual  Life  Insurance  Companies,  Sections  152- 

169 55 

Chapter  IX — Fire  and  Marine  Companies,  Sections  170-221 61 

Chapter  X — Live  Stock  Insurance,  Section  222 83 

Chapter  XI — Casualty  Insurance  Companies,  Sections  223-248 ...     84 

Chapter  XII — Fidelity,  Guaranty  and  Surety  Companies,  Sections 

249-262  ". 92 

Chapter  XIII — General  Provisions — applies  to  various  companies, 

Sections  263-295 100 

Chapter  XIV— Workmen's  Compensation  Act,  Sections  296-390. . .   110 

Chapter  XV — Mutual  Assessment  Accident  Insurance — Home 

Companies,  Sections  391-407 143 

Chapter  XVI — Mutual  Fire,  Lightning,  Hail  and  Storm  Insur- 
ance Companies — Their  regulation,  government  and  control, 
Sections  408-427 149 

Chapter  -XVII — Mutual  Hail  Insurance  Companies,  Sections  428- 

437  157 

Chapter  XVIII — Beciprocal  Indemnity  Contracts — Begulation 

thereof — Powers  of  Commissioner,  Sections  438-450 160 

Chapter  XIX — Printers  Mutual  Fire  and  Storm  Insurance  Asso- 
ciations, Sections  451-453 164 

Chapter  XX — Mutual  plan  of  Insurance  against  loss  or  damage 
resulting  from  Burglary,  Eobbery,  and  loss  of  Money  and  Se- 
curities in  Transportation,  Sections  454-461 165 

Chapter  XXI — Agents  —  Definition  of  —  Powers  —  Eestrictions — 

Penalties,  Sections  462-484 167 

Chapter  XXII — Fraternal  Beneficiary  Associations,  Sections  485- 

526  174 

Chapter  XXIII — Eegulating  the  Sale  of  Stock  of  Corporations, 

Sections  527-550  (Blue  Sky  Law) 196 

Chapter  XXIV— Anti-Trust  Law,  Sections  551-573 203 

Chapter  XXV — Eegulating  the  Business  of  Insurance  Issued  on  the 

Llodys  Plan,  Sections  574-584 211 

Chapter  XXVI — Co-Operative  Savings  and  Contract  Loan  Compa- 
nies, Sections  585-622 .^ 215 


468972 


INSURANCE  LAWS 

A    COMPILATION    OF    THE    STATUTES    OF   THE    STATE    OF    TEXAS 
WHICH  BEAR  UPON  THE  SUBJECT  OF  INSURANCE 

DIGEST  OF  1 92 1 


CHAPTER  I. 

COMMISSIONER  OF  INSURANCE  AND  BANKING. 
Appointment  of. 

SECTION  1.  The  Governor  shall  appoint,  by  and  with  the  advice 
and  consent  of  the  Senate,  a  Commissioner  of  Insurance  and  Banking, 
who  shall  be  a  citizen  of  the  State  and  experienced  in  matters  of  insur- 
ance. (R.  S.,  Art.  4485.) 

Term  of  Office. 

2.  The  Commissioner  of  Insurance  and  Banking  shall  hold  his  office 
for  the  term  of  two  years,  and  until  the  appointment  and  qualification 
of  his  successor.     (R.  S.,  Art.  4486.) 

Vacancies  in  Office,  How  Filled. 

3.  The  Governor  may  fill  any  vacancy  occurring  in  the  office  of 
Commissioner  of  Insurance  and  Banking,  and  report  the  name  of  the 
person  so  appointed  to  the  Senate,  if  in  session,  or  at  the  next  succeed- 
ing session  of  the  Legislature.     Should  the  Senate  fail  to  confirm  the 
appointment  made  by  the  Governor  within  ten  days  after  being  advised 
thereof,  then  the  said  office  shall  be  deemed  vacant  and  a  new  appoint- 
ment shall  be  made  until  the  office  is  filled.     (R.  S.,  Art.  4487.) 

Oath  and  Bond. 

4.  Within  fifteen  days  after  notice  of  his  appointment,  and  before 
entering  upon  the  duties  of  his  office,  he  shall  take  the  oath  of  office 
prescribed  by  the  Constitution,  and  shall  give  a  bond  to  the  State  of 
Texas  in  the  sum  of  five  thousand  dollars,  with  two  or  more  good  and 
sufficient  sureties,  to  be  approved  by  the  Governor,  and  conditioned 
for  the  faithful  discharge  of  the  duties  of  his  office,  which  oath  and 
bond  shall  be  filed  in  the  office  of  the  Secretary  of  State.     (R.  S.,  Art. 
4488.) 

Clerks,  May  Appoint. 

5.  Said   Commissioner  may   appoint   a   competent   chief   clerk   and 
such  other  clerks  as  the  labors  of  his  office  may  require;  and  all  clerks 
shall  be  removable  at  the  pleasure  of  the  Commissioner.     (R.  S.,  Art. 
4489.) 

Chief  Clerk,  Duties  of. 

6.  The  chief  clerk  shall  possess  all  the  power  and  perform  all  the 
duties  attached  by  law  to  the  office  of  Commissioner  during  the  neces- 


6  INSURANCE  LAWS  OF  TEXAS. 

sary  or  unavoidable  absence  of  the  Commissioner,  or  his  inability  to  act 
from  any  cause.  The  Commissioner  shall  be  responsible  for  the  acts  of 
his  chief  clerk,  who  shall,  before  entering  upon  the  duties  of  his  position, 
take  the  oath  required  of  the  Commissioner;  he  may  also  be  required 
by  the  Commissioner  to  enter  into  bond  with  security,  payable  to  said 
Commissioner  for  the  faithful  performance  of  the  duties  of  his  position. 
(R.  S.,  Art.  4490.) 

Shall  Be  Styled  Commissioner  of  Insurance  and  Banking,  and  Have  a  Seal. 

7.  The  said  Commissioner  shall  be  styled  the  Commissioner  of  Insur- 
ance and  Banking  and  shall  have  a  seal  of  office,  the  design  of  which  shall 
consist  of  a  star  with  five  points  with  letters  composing  the  word  "Texas" 
arranged  between  the  respective  points  thereof;  said  seal  to  be  not  less 
than  one  and  a  half  and  not  more  than  two  inches  in  diameter,  and  on 
the  margin  "Department  of  Insurance  and  Banking,"  or  an  intelligible 
abbreviation  thereof.    Such  seal  thus  formed  and  impressed  shall  be  the 
seal  of  office  of  the  Department  of  Insurance  and  Banking.     (R.  S., 
Art.  4491.) 

Ineligibility  of  Certain  Persons. 

8.  No  person  who  is  a  director,  officer  or  agent  of,  or  directly  or 
indirectly  interested  in,  any  insurance  company,  except  as  insured,  shall 
be  a  commissioner  or  clerk;  and  it  shall  be  unlawful  for  such  commis- 
sioner, or  any  person  employed  by  him,  or  in  any  way  connected  with 
his  office,  to  purchase  all  or  any  part  of  any  mine  or  mineral  land,  to  be 
in  any  manner  interested  in  such  purchase,  during  the  term  of  his  office 
or  employment.     (R.  S.,  Art.  4492.) 


CHAPTER  II. 

DUTIES  OF  THE  COMMISSIONER. 

9.  In  addition  to  the  duties  required  of  the  Commissioner  of  Insur- 
ance and  Banking,  he  shall  perform  other  duties  as  follows:     (R.  S., 
Art.  4493.) 

Shall  Execute  the  Laws. 

10.  (1)     To  see  that  all  laws  respecting  insurance  and  insurance 
companies  are  faithfully  executed.     (R.  S.,  Art.  4493,  Subdivision  1.) 

File  Articles  of  Incorporation  and  Other  Papers. 

11.  (2)     To  file  and  preserve  in  his  office  all  acts  or  articles  of  incor- 
poration of  insurance  companies  and  all  other  papers  required  by  law 
to  be  deposited  with  him,  and,  upon  application  of  any  party  interested 
therein  to  furnish  certified  copies  thereof  upon  payment  of  the  fees 
prescribed  by  law.     (R.  S.,  Art.  4493,  Subdivision  2.) 

Shall  Calculate  Net  Value  of  Policies. 

12.  (3)     He  shall,  as  soon  as  practicable,  in  each  year,  calculate  or 
cause  to  be  calculated  in  his  office,  by  an  officer  or  employe  of  his  depart- 
ment, the  net  value  on  the  31st  day  of  December  of  the  previous  year 


INSURANCE  LAWS  OF  TEXAS.  7 

of  all  the  policies  in  force  on  that  day  in  each  life  or  health  insurance 
company  doing  business  in  this  State,  upon  the  basis  and  in  the  manner 
prescribed  by  law.  (R.  S.,  Art.  4493,  Subdivision  3.) 

Shall  See  That  Company  Has  Net  Value  of  Policies  on  Hand. 

13.  (4)     Having  determined  the  net  value  of  all  the  policies  in 
force,  it  shall  be  his  duty  to  see  that  the  company  has  in  safe  securities 
of  the  class  and  character  required  by  the  laws  of  this  State  the  amount 
of  said  net  value  of  all  its  policies,  after  all  its  debts  and  claims  against 
it  and  at  least  one  hundred  thousand  dollars  of  surplus  to  policyholders 
have  been  provided  for.     (R.  S.,  Art.  4493,  Subdivision  4.) 

May  Accept  the  Valuation  of  Commissioners  of  Other  States. 

14.  (5)     He  may  accept  the  valuation  made  by  the  Insurance  Com- 
missioner of  the  State  under  whose  authority  a  life  insurance  company 
was  organized  when  such  valuation  has  been  properly  made  on  sound 
and  recognized  principles,  as  a  legal  basis  as  above;  provided,  the  com- 
pany shall  furnish  to  him  a  certificate  of  the  Insurance  Commissioner  of 
such  States,  setting  forth  the  value  calculated  on  the  data  designated 
above  of  all  the  policies  in  force  in  the  company  on  the  previous  31st  day 
of  December,  and  stating  that  after  all  other  debts  of  the  company  and 
claims  against  it  at  that  time,  and  one  hundred  thousand  dollars  surplus 
to  policyholders,  were  provided  for,  the  company  had  in  safe  securities  of 
the  character  required  by  the  laws  of  this  State,  an  amount  equal  to  the 
net  value  of  all  its  policies  in  force,  and  that  said  company '  is  entitled 
to  do  business  in  its  own  State.     (R.  S.,  Art.  4493,  Subdivision  5.) 

Shall  See  That  Companies  Furnish  Certificates. 

15.  (6)     Every  life  insurance  company  doing  business  in  this  State 
during  the  year  for  which  the  statement  is  made  that  fails  promptly  to 
furnish  the  certificate  aforesaid,  shall  be  required  to  make  full  detailed 
lists  of  policies  and  securities  to  the  Insurance  Commissioner,  and  shall 
be  liable  for  all  charges  and  expenses  consequent  upon  not  having  fur- 
nished said  certificate.     (R.  S.,  Art.  4493,  Subdivision  6.) 

Shall  Calculate  the  Reserve  on  Fire  Insurance. 

16.  (7)     For  every  company  doing  fire  insurance  business  in  this 
State  he  shall  calculate  the  reinsurance  reserve  for  unexpired  fire  risks 
by  taking  50  per  cent  of  the  premiums  received  on  all  unexpired  risks 
that  have  less  than  one  year  to  run,  and  a  pro  rata  of  all  premiums 
received  on  risks  that  have  more  than  one  year  to  run;  provided,  that, 
when  the  reinsurance  reserve,  calculated  as  above,  is  less  than  40  per  cent 
of  all  the  premiums  received  during  the  year,  the  reinsurance  reserve 
in  this  case  shall  be  the  whole  of  the  premiums  received  on  all  of  its 
unexpired  risks.     For  every  company  transacting  any  kind  of  insurance 
business  in  this  State  for  which  no  basis  is  prescribed  by  law,  he  shall 
calculate  the  reinsurance  reserve  upon  the  same  basis  prescribed  in  this 
section   [article]    as  to  companies  transacting  fire  insurance  business. 
(R.  S.,  Art.  4493,  Subdivision  7.) 

Note. — A  title  and  guaranty  company  insuring  titles  to  real   estate,  issuing 
contracts  for  a  specified  number  of  years,  for  which  it  collects  a  single  premium 


8  INSURANCE  LAWS  OF  TEXAS. 

at  once  (not  annually)  must  set  aside  as  a  reserve  50  per  cent  of  such  single 
premium  and  maintain  the  same  during  the  entire  life  of  the  contract.  (Opin- 
ion of  Attorney  General,  February  27,  1912.) 

Shall  Charge  Premiums  in  Marine  and  Inland  Insurance. 

17.  (8)      In  marine  and  inland  insurance  he  shall  charge  all  the 
premiums  received  on  unexpired  risks  as  a  reinsurance  reserve.     (E.  S., 
Art.  4493,  Subdivision  8.) 

Duties  When  Company's  Capital  Is  Impaired. 

18.  (9)     Having  charged  against  a  company  other  than  life,  the 
reinsurance  reserve,  as  prescribed  by  the  laws  of  this  State  and  adding 
thereto  all  other  debts  and  claims  against  the  company,  he  shall,  in 
case  he  finds  the  capital  stock  of  the  company  impaired  to  the  extent 
of  20  per  cent,  give  notice  to  the  company  to  make  good  its  whole  capital 
stock  within  sixty  days,  and  if  this  is  not  done  he  shall  require  the 
company  to  cease  to  do  business  within  this  State,  and  shall  thereupon, 
in  case  the  company  is  organized  under  authority  of  the  State,  imme- 
diately institute  legal  proceedings  to  determine  what  further  shall  be 
done  in  the  case.     (E.  S.,  Art.  4493,  Subdivision  9.) 

Shall  Publish  Result  of  Examinations. 

19.  (10)     The  Commissioner  shall  publish  the  result  of  his  exami- 
nation of  the  affairs  of  any  company  whenever  he  deems  it  for  the  interest 
of  the  public.     (E.  S.,  Art.  4493,  Subdivision  10.) 

Shall  Suspend  or  Revoke  Certificate  of  Authority. 

20.  (11)     He  shall  suspend  the  entire  business  of  any  company  of 
this   State  and  the  business  within  this  State  of  any  other  company 
during  its  non-compliance  with  any  provision  of  the  laws  relative  to 
insurance   or  when   its   business   is   being   fraudulently   conducted,   by 
suspending  or  revoking  the  certificate  granted  by  him;  and  he  shall 
give  notice  thereof  to  the  Insurance  Commissioner  or  other  similar  officer 
of  every  State  and  shall  publish  notice  thereof;  provided,  that  he  shall 
give  such  company  at  least  ten  days'  notice  in  writing  of  his  intention 
to  suspend  its  right  to  do  business  or  revoke  the  certificate  of  authority 
granted  by  him,  stating  specifically  the  reason  why  he  intends  to  so 
suspend,  or  revoke  such  certificate  of  authority.      (E.   S.,  Art.   4493, 
Subdivision  11.) 

Shall  Report  to  Attorney  General. 

21.  (12)     He  shall  report  promptly  and  in  detail  to  the  Attorney 
General  any  violation  of  law  relative  to  insurance  companies   or  the 
business  of  insurance.     (E.  S.,  Art.  4493,  Subdivision  12.) 

Shall  Furnish  Blanks. 

22.  (13)     He  shall  furnish  to  the  companies  required  to  report  to 
him  the  necessary  blank  forms  for  the  statements  required.      (E.   S., 
Art.  4493,  Subdivision  13.) 


INSURANCE  LAWS  OF  TEXAS.  9 

Siiall  Keep  Records. 

23.  (14)     He  shall  preserve  in  a  permanent  form  a  full  record  of 
his  proceedings  and  a  concise  statement  of  the  condition  of  each  com- 
pany or  agency  visited  or  examined.     (R.  S.,  Art.  4493,  Subdivision  14.) 

Shall  Give  Certified  Copies. 

24.  (15)     At  the  request  of  any  person,  and  on  the  payment  of  the 
legal  fee,  he  shall  give  certified  copies  of  any  record  or  papers  in  his 
office  when  he  deems  it  not  prejudicial  to  public  interest,  and  shall  give 
such  other  certificates  as  are  provided  for  by  law.     (R.  S.,  Art.  4493, 
Subdivision  15.) 

Shall  Report  Annually  to  Governor. 

25.  (16)     He  shall  report  annually  to  the  Governor  the  names  and 
compensations  of  his  clerks,  the  receipts  and  expenses  of  his  department 
for  the  year,  his  official  acts,  the  conditions  of  companies  doing  business 
in  this  State,  and  such  other  information  as  will  exhibit  the  affairs  of 
said  department.     (R.  S.,  Art.  4493,  Subdivision  16.) 


.  —  The  Printing  Board  is  without  authority  to  decline  to  have  the  report 
of  the  Commissioner  printed.     (Opinion  of  Attorney  General,  May  6,  1918.) 

Shall  Send  Copy  of  Reports  to. 

26.  (17)     He  shall  send  a  copy  of  such  annual  report  to  the  in- 
surance commissioner  or  other  similar  officer  of  every  State,  and  to  each 
company  doing  business  in  the  State.     (R.  S.,  Art.  4493,  Subdivision 
17.) 

Shall  Report  Laws  to  Commissioners  of  Other  States,  When. 

27.  (18)   On  request  he  shall  communicate  to  the  insurance  com- 
missioner or  other  similar  officer  of  any  other  State,  in  which  the  sub- 
stantial provisions  of  the  law  of  this  State  relative  to  insurance  have 
been  or  shall  be  enacted,  any  facts  which  by  law  it  is  his  duty  to  ascer- 
tain respecting  the  companies  of  this  State  doing  business  within  such 
other  State.     (R.  S.,  Art.  4493,  Subdivision  18.) 

Shall  See  That  No  Company  Does  Life  Business,  When. 

28.  (19)     He  shall  see  that  no  company  is  permitted  to  transact  the 
business  of  life  insurance  in  this  State  whose  charter  authorizes  it  to  do 
a  fire,  marine,  lightning,  tornado  or  inland  insurance  business,  and  that 
no  company  authorized  to  do  a  life  or  health  insurance  business  in  this 
State  be  permitted  to  take  fire,  marine  or  inland  risks.     (R.  S.,  Art. 
4493,  Subdivision  19.) 

Shall  Admit  Mutual  Companies,  When. 

29.  (20)     The  Commissioner  of  Insurance  and  Banking  shall  admit 
into  this  State  mutual  insurance  companies  organized  under  the  laws  of 
other  States  and  who  have  $200,000  assets  in  excess  of  liabilities  en- 
gaged in  cyclone,  tornado,  hail  and  storm  insurance.     (R.  S.,  Art.  4493, 
Subdivision  20.) 


10  INSURANCE  LAWS  OF  TEXAS. 

May  Change  Form  of  Annual  Statement. 

30.  The  Commissioner  of  Insurance  and  Banking  may  from  time  to 
time  make  such  changes  in  the  forms  of  the  annual  statements  required 
of  insurance  companies  of  any  kind  as  shall  seem  to  him  best  adapted 
to  elicit  a  true  exhibit  of  their  condition  and  methods  of  transacting 
business;  provided,  that  such  terms  and  requirements  shall  elicit  only 
such  information  as  shall  pertain  to  the  business  of  the  company.     (R.  S., 
Art.  4494.) 

Duties  When  Parties  Refuse  to  Appear  and  Testify. 

31.  Whenever  any  person  shall  refuse  to  appear  and  testify,  or  to 
give  information  authorized  by  this  chapter  to  be  demanded  by  the 
Commissioner  of  Insurance,  such  Commissioner  may  file  his  application 
under  oath  with  any  district  judge  or  district  court  within  this  State 
where  said  witness  is  summoned  to  appear,  and  it  shall  be  the  duty  of 
said  judge  to  summon  said  witness,  administer  oaths  as  required  by  law 
and  require  answers  to  such  questions,  and  such  judge  or  court  shall 
have  power  to  punish  for  contempt  as  now  provided  by  law.     (R.  S., 
Art.  4495.) 

Sheriff  and  Other  Peace  Officers  Shall  Execute  Service. 

32.  Sheriffs  and  other  peace  officers  of  this  State  shall  execute  pro- 
cess directed  to  them  by  the   Commissioner  of  Insurance  and  make 
return  thereof  to  him  as  in  the  case  of  process  issued  from  any  of  the 
courts.     (R.  S.,  Art.  4496.) 

Shall    Issue    Certificate    of    Authority,   When — Shall    Revoke    Certificate 
When  Suit  Removed  to  Federal  Court. 

33.  Should  the  Commissioner  of  Insurance  and  Banking  be  satisfied 
that  any  company  applying  for  a  certificate  of  authority  has  in  all 
respects  fully  complied  with  the  law,  and  that,  if  a  stock  company,  its 
capital  stock  has  been  fully  paid  up;  that  it  has  the  required  amount 
of  capital  or  surplus  to  policyholders,  it  shall  be  his  duty  to  issue  to 
such  company  a  certificate  of  authority  under  the  seal  of  his  office, 
authorizing  such  company  to  transact  insurance  business,  naming  therein 
the  particular  kind  of  insurance,  for  the  period  of  not  less  than  three 
months  nor  extending  beyond  the  last  day  of  February  next  following 
the   date    of   such   certificate.     And   if   any   such   insurance    company 
organized  under  the  laws  of  any  State,  or  country,  after  having  obtained 
a  certificate  of  authority  from  the  Commissioner  of  Insurance  and  Bank- 
ing, or  other  officer  authorized  to  issue  such  permit  to  do  business  in  this 
State,  shall  bring  in  any  Federal  court  any  suit  or  action  against  any 
citizen  of  this  State,  or  shall  remove  any  suit  or  action  heretofore  or 
hereafter  commenced  in  any  court  of  this  State,  to  which  it  is  a  party, 
to  any  Federal  court,  the  Commissioner  of  Insurance  and  Banking  shall 
forthwith  revoke  and  recall  the  certificate  of  authority  of  such  insurance 
company  to  do  and  transact  business  in  this  State,  and  no  renewal,  of 
authority  shall  be  granted  to  such  insurance  company  to  do   business 
in  this  State  for  a  period  of  three  years  after  such  revocation,  and  such 
insurance  company  shall  thereafter  be  prohibited  from  transacting  any 


INSURANCE  LAWS  OF  TEXAS.  11 

business  in  this  State  until  again  duly  authorized  by  law.      (R.   S., 
Art.  4497.) 

Note. —  (1)  Fidelity,  guaranty  and  surety  companies  and  insurance  companies 
are  subject  to  the  provisions  in  regard  to  removal  or  bringing  of  suits  in  Fed- 
eral court.  (Opinion  of  Attorney  General,  April  15,  1909.) 

(2)  A  foreign  life  insurance  company  must  have  all  its  capital  stock,  author- 
ized by  its  charter,  fully  paid  up,  before  it  can  obtain  a  license  to  do  busi- 
ness in  Texas.     (Opinion  of  Attorney  General,  August  27,  1913.) 

(3)  The  statute  authorizing  revocation  of  license  for  filing  suit  in,  or  re- 
moving suit  to,  a  Federal  court,  does  not  apply  to  fraternal  beneficiary   soci- 
eties.    Such   statute,  however,   is   not   unconstitutional.      (Opinion  of  Attorney 
General,  May  5,  1915.) 

(4)  A  company  which  does  only  a  fidelity,  guaranty  and  surety  business  is 
not  required  to  have  its  entire  authorized  capital  paid  up  in  order  to  obtain 
a  certificate  of  authority  to  do  business  in  Texas.      (Opinion  of  Attorney  Gen- 
eral, June  1,  1915.) 

Shall  Compute  Reserve  Liability  of  Companies. 

34.  It  shall  be  the  duty  of  the  Commissioner  of  Insurance  and 
Banking,  as  soon  as  practicable,  in  each  year,  to  compute  the  reserve 
liability  on  the  31st  day  of  December  of  the  preceding  year  of  every 
company  organized  under  the  laws  of  this  State  or  authorized  to  trans- 
act business  in  this  State,  which  has  outstanding  policies  of  insurance 
on  the  lives  of  citizens  of  this  State  in  accordance  with  the  following 
rules: 

1.  The  net  value  on  the  first  day  of  December  of  the  preceding 
year  of  all  outstanding  policies  of  life  insurance  in  the  company  issued 
prior  to  the  first  day  of  January,  1910,  shall  be  computed  according 
to  the  terms  of  said  policies  on  the  basis  of  the  American  Experience 
Table  of  Mortality  and  4£  per  cent  interest  per  annum. 

2.  The  net  value  on  the  last  day  of  December  of  the  preceding  year 
of  all  policies  of  life  insurance  issued  after  the  31st  day  of  December, 
1909,  upon  the  basis  of  the  Actuaries'  or  Combined  Experience  Table 
of  Mortality,  with  4  per  cent  interest  per  annum;  provided,  that  the 
policies  of  any  such  life  insurance  company  thereafter  issued  upon  the 
reserve  basis  of  an  interest  rate  lower  than  4  per  cent  shall  be  computed 
upon  the  basis  of  the  American  Experience  Table  of  Mortality  with 
interest  at  such  lower  rate  per  annum;  provided,  that  any  company 
which  on  January  1,  1909,  was  writing  policies  on  the  basis  of  4J  per 
cent  may  continue  on  that  basis  until  January  1,  1912,  and  its  policies 
shall  be  so  valued. 

3.  In  every  case  in  which  the  actual  premium  charged  for  an  insur- 
ance is  less  than  the  net  premium  for  such  insurance  computed  ace 3rd- 
ing  to  its  respective  tables  of  mortality  and  rate  of  interest  aforesaid, 
the  company  shall  also  be  charged  with  the  value  of  annuity,  the  amount 
of  which  shall  equal  the  difference  between  the  premium  charged  and 
that  required  by  the  rules  above  stated  and  the  term  of  which  in  years 
shall  equal  the  number  of  future  annual  payments,  due  on  the  insur- 
ance at  the  date  of  the  valuation.     (R.  S.,  Art.  4498.) 

Note. — A  life  insurance  company  has  outstanding  contracts  containing  the 
following  provisions: 

"On  the  first  day  of  August  of  each  year,  during  the  continuance  of  this  con- 
tract, the  company  shall  compute  the  number  of  thousands  of  insurance  in  force 


12  INSURANCE  LAWS  OF  TEXAS. 

written  for  a  period  of  ten  years  from  and  after  August  1,  1906,  in  the  State 
of  Texas,  upon  which  there  shall  have  been  paid  in  cash  during  the  preceding 
year  one  full  annual  premium,  two  semi-annual  or  four  quarter-annual  pre- 
miums. 

"The  company  further  agrees  on  the  dates  aforesaid  to  credit  said  member 
with  such  a  sum  of  money  from  the  expense  element  of  premiums  paid  on  in- 
surance written  in  said  State,  during  said  period,  after  said  date,  as  shall  be 
obtained  by  dividing  an  amount  of  money  equal  to  one  dollar  for  each  one  thou- 
sand dollars  of  insurance  in  force  at  said  dates,  written  during  said  period, 
after  August  1,  1906,  by  the  number  of  said  members'  contracts  in  force  at  the 
time  of  such  distribution. 

"The  amount  so  credited  to  said  member  shall  each  year,  on  the  anniversary 
of  the  date  of  this  contract,  or  within  sixty  days  thereafter,  provided  this  con- 
tract be  then  in  force,  be  paid  to  him  by  said company,  subject  to  the 

agreement  of  said  member  in  his  application  herefor." 

The  amount  which  may  be  properly  charged  on  December  31st  any  year  against 
the  company  as  a  liability  on  account  of  the  issuance  of  such  contracts  is  the 
amount  of  money  credited  to  the  various  special  contract  holders  on  August  1st 
of  any  such  year — the  last  distribution  period.  The  money  paid  in  after  that 
date  and  which  is  being  held  in  a  general  fund  for  coming  distribution  dates, 
should  not  be  charged  as  a  liability.  (Opinion  of  Attorney  General,  January 
30,  1912.) 

Shall  Calculate  Reinsurance  Reserve. 

35.  On  the  31st  day  of  December  of  each  and  every  year,  or  as  soon 
thereafter  as  may  be  practicable,  the  Commissioner  of  Insurance  and 
Banking  shall  have  calculated  in  his  office  the  reinsurance  reserve  for  all 
unexpired  risks  of  all  insurance  companies  organized  under  the  laws  of 
this  State,  or  transacting  business  in  this  State,  transacting  any  kind  of 
insurance  other  than  life,  fire,  marine,  inland,  lightning  or  tornado  in- 
surance, by  taking  50  per  cent  of  the  gross  premiums  on  all  unexpired 
risks  that  have  less  than  one  year  to  run  and  a  pro  rata  of  all  premiums 
received  on  risks  that  have  more  than  one  year  to  run.     (E.  S.,  Art. 
4499.) 

Shall  Examine  Companies — Have  Free  Access  to  Books — May  Revoke  or 
Modify  Certificate — Expenses  for  Examinations. 

36.  The  Commissioner  of  Insurance  and  Banking  shall,  at  the  end 
of  each  two  years,  or  oftener  if  he  deems  necessary,  in  person  or  by 
one  or  more  examiners  commissioned  in  writing,  visit  each  company 
organized  under  the  laws  of  this  State  and  examine  its  financial  con- 
dition and  its  ability  to  meet  its  liabilities.     He  shall  have  free  access 
to  all  the  books  and  papers  of  the  company  or  agents  thereof  relating 
to  the  business  and  affairs  of  such  company,  and  shall  have  power  to 
summon  and  examine  under  oath  the  officers,  agents  and  employes  of 
such  company  and  any  other  person  within  the  State  relative  to  the 
affairs  of   such  insurance   company.     He   may   revoke   or  modify   any 
certificate  of  authority  issued  by  him  when  any  conditions  or  require- 
ments prescribed  by  law  for  granting  it  no  longer  exist;  provided,  that 
he  shall  give  such  company  at  least  ten  days'  notice  in  writing  of  his 
intention  to  revoke  or  modify  such  certificate  of  authority  issued  by 
him,  stating  specifically  the  reasons  why  he  intends  to  revoke  or  modify 
such  certificate.     The  expense  of  every  such  examination  shall  be  paid 
by  the  company  so  examined,  but  the   Commissioner  shall  not  make 
any  charge  for  services  except  for  traveling  or  other  actual  expenses 


INSURANCE  LAWS  OF  TEXAS.  13 

and  shall  furnish  the  company  with  an  itemized  statement  of  such 
expenses.     (E.  S.,  Art.  4500.) 

Powers  and  Duties  of  Commissioner  in  Case  of  Examination. 

37.  The  Commissioner  of  Insurance  and  Banking,  for  the  purpose 
of  examination  authorized  by  law,  has  power,  either  in  person  or  by 
one  or  more  examiners  by  him  commissioned  in  writing: 

1.  To  require  free  access  to  all  books  and  papers  within  this  State 
of  any  insurance  companies  or  the  agents  thereof  doing  business  within 
this  State. 

2.  To  summon  and  examine  any  person  within  this  State,  under 
oath,  which  he  or  any  examiner  may  administer,  relative  to  the  affairs 
and  conditions  of  any  insurance  company. 

3.  To  visit  at  its  principal  office,  wherever  situated,  any  insurance 
company  doing  business  in  this  State,  for  the  purpose  of  investigating 
its  affairs  and  conditions,  and  shall  revoke  the  certificate  of  authority 
of  any  such  company  in  this  State  refusing  to  permit  such  examination. 
The  reasonable  expenses  of  all  such  examinations  shall  be  paid  by  the 
company  examined. 

4.  He  may  revoke  or  modify  any  certificate  of  authority  issued  by 
him  when  any  conditions  prescribed  by  law  for  granting  it  no  longer 
exist. 

5.  He  shall  also  have  power  to  institute  suits  and  prosecutions  either 
by  the  Attorney  General  or  such  other  attorney  as  the  Attorney  Gen- 
eral may  designate,  for  any  violations  of  the  Jaw  of  this  State  relat- 
ing to  insurance,  and  no  action  shall  be  brought  or  maintained  by  any 
person  other  than  the  Commissioner  of  Insurance  and  Banking  for  clos- 
ing up  the  affairs  or  to  enjoin,  restrain  or  interfere  with  the  prosecution 
of  the  business  of  any  such  insurance  company  organized  under  the  laws 
of  this  State.     (E.  S.,  Art.  4501.) 

f-« 
Transfer  of  Securities,  Must  Be  Countersigned. 

38.  No  transfer  by  the  Commissioner  of  Insurance  of  securities  of 
any  kind,  in  any  way  held  by  him  in  his  official  capacity,  shall  be  valid 
unless  countersigned  by  the  Treasurer  of  the  State.     (E.  S.,  Art.  4502.) 

State  Treasurer,  Duty  in  Regard  to  Transfers. 

39.  It  is  the  duty  of  the  State  Treasurer— 

(1)  To  countersign  any -such  transfer  presented  to  him  by  the  Com- 
missioner. 

(2)  To  keep  a  record  of  all  transfers,  stating  the  name  of  the  trans- 
feree, unless  transferred  in  blank,  and  a  description  of  the  security. 

(3)  Upon  countersigning,  to  advise  by  mail  the  company  concerned 
the  particulars  of  the  transaction. 

(4)  In  his  annual  report  to  the  Legislature,  to  state  the  transfers 
and  the  amount  thereof  countersigned  by  him.     (E.  S.,  Art.  4503.) 

Free  Access  to   Records,   Books,   Etc.,   Given   to   Commissioner   and   State 
Treasurer. 

40.  For  the  purpose  of  verifying  the  correctness  of  records,  the  Com- 
missioner of  Insurance  shall  be  entitled  to  free  access  to  the  Treas- 


14  INSURANCE  LAWS  OF  TEXAS. 

urer's  records  required  by  the  preceding  article,  and  the  Treasurer  shall 
be  entitled  to  free  access  to  the  books  and  other  documents  of  the 
Insurance  Department  relating  to  securities  held  by  the  Commissioner. 
(E.  S.,  Art.  4504.) 

Instruments  Executed  and  Copies  of  Papers  Made  Evidence. 

41.  Every  instrument  executed  by  the  Commissioner  of  Insurance 
of  this  State,  or  of  any  other  State  in  which  the  substantial  provisions 
of  the  laws  of  this  State  relating  to  insurance  have  been  or  shall  be  en- 
acted, pursuant  to  authority  conferred  by  law,  and  authenticated  by  his 
seal  of  office,  shall  be  received  as  evidence,  and  copies  of  papers  and  rec- 
ords in  his  office  certified  by  him  and  so  authenticated  shall  be  received 
as  evidence  with  the  same  effect  as  the  originals.     (E.  S.,  Art.  4505.) 

Commissioner  Authorized  to  Make  Inquiries    of  Companies. 

42.  The  Commissioner  of  Insurance  is  authorized  to  address  any 
inquiries  to  any  insurance  company  in  relation  to  its  business  and  con- 
dition, or  any  matter  connected  with  its  transaction,  which  he  may  deem 
necessary  for  the  public  good,  or  for  a  proper  discharge  of  his  duty 
and  it  shall  be  the  duty  of  the  company  so  addressed  to  promptly  answer 
such  inquiries  in  writing.     (E.  S.,  Art.  4506.) 

Commissioner's  Report. 

43.  It  shall  be  the  duty  of  the  Commissioner  to  cause  the  informa- 
tion contained  in  the  annual  statements  of  companies  to  be  arranged  in 
tabular  form,  and  prepare  the  same  in  a  single  document  for  printing 
and  submit  the  same  to  the  Legislature  as  a  portion  of  his  regular  report 
to  that  body.     (E.  S.,  Art.  4507.) 

Valid    Final    Judgment — Insurance    Company's    Certificate  of    Authority 
Revoked,  When. 

44.  Should  any  insurance  company  fail  or  neglect  to  pay  off  and 
discharge  any  execution,  issued  upon  a  valid  final  judgment  against 
said  company,  within  thirty  days  after  the  notice  of  the  issuance  thereof,, 
then  in  that  event  the  certificate  of  authority  of  said  company  to  trans- 
act business  of  insurance  shall  be  revoked,  canceled  and  annulled,  and 
said  company  shall  be  prohibited  from  transacting  business  of  insurance 
in  this  State  until  said  execution  be  satisfied.     (E.  S.,  Art.  4508.) 

Note. — Commissioner  cannot  revoke  permit  for  failure  to  pay  judgment  un- 
less it  be  a  final  and  also  a  valid  judgment.  As  long  as  there  is  pending  an 
independent  original  suit  to  determine  the  validity  of  a  default  judgment,  it 
is  not  final  and  Commissioner  cannot  revoke  permit.  Commissioner  cannot  de- 
termine validity  of  judgment  while  suit  is  pending  to  set  it  aside,  nor  pass- 
upon  the  jurisdiction  of  the  courts  with  reference  to  such  suit.  (Opinion  of 
Attorney  General,  September  30,  1915.) 

Commissioners  to  Give  Certificates,  Attested  by  Seal. 

45.  It  shall  be  the  duty  of  the  Secretary  of  State,  Commissioner 
of  the  General  Land  Office,  Comptroller,  Treasurer,  Commissioner  of 
Agriculture,  Commissioner  of  Insurance  and  Banking,  State  Librarian, 
Adjutant  General  and  Attorney  General  to  furnish   any  person  who 
may  apply  for  the  same,  with  a  copy  of  any  paper,  document  or  record 


INSURANCE  LAWS  OF  TEXAS.  15 

in  their  respective  offices,  and  also  to  give  certificates,  attested  by  the 
seals  of  their  respective  offices,  certifying  to  any  fact  or  facts  contained 
in  the  papers,  documents  or  records  of  their  offices,  to  any  person  apply- 
ing for  the  same.  (E.  S.,  Art.  3833.) 

Fees. 

46.  It  shall  be  lawful  for  the  officers  named  in  the  preceding  article 
to  demand  and  receive  the  following  fees  for  the  services  mentioned 
therein : 

For  copies  of  any  paper,  document  or  record  in  their  offices  in 
the  English  language,  including  certificate  and  seal,  and  for 
each  hundred  words $  0  15 

For  copies  of  any  paper,  document  or  record  in  their  offices,  in 
any  other  language  than  the  English,  including  certificate  and 
seal,  for  each  hundred  words 25 

For  each  translated  copy  of  any  paper,  document  or  record  in 
their  offices,  including  certificate  and  seal,  for  each  hundred 
words  30 

For  the  copy  of  any  plat  or  map  in  their  offices,  such  fee  as  may 
be  established  by  the  officer  in  whose  office  the  same  is  made, 
to  be  determined  with  reference  to  the  amount  of  labor  re- 
quired. 

For  each  certificate  not  otherwise  provided  for 50 

(R.  S.,  Art.  3834.) 

47.  The  Commissioner  of  Insurance  and  Banking  shall  charge  and 
receive  for  the  use  of  the  State  the  following  fees,  towit: 

For  filing  each  declaration  or  certified  copy  of  charter  of  insur- 
ance company $  25  00 

Note.- — Companies  must  pay  $25  filing  fee  for  each  amended  declaration  or 
certified  copy.     (Attorney  General's  opinion,  November  4,  1901.) 

For  filing  the  annual  statement  of  an  insurance  company,  or 

certificate  in  lieu  thereof 20  00 

For  certificate  of  authority  and  certified  copy  thereof 1  00 

For  every  copy  of  any  paper  filed  in  his  department,  for  each 

folio  20 

For  affixing  his  official  seal  and  certifying  to  the  same 100 

For  valuing  policies  of  life  insurance  companies,  for  each  one 

million  of  insurance  or  fraction  thereof 10  00 

For  official  examinations  of  companies  under  the  law,  the  actual 

expense  incurred,  and  ten  dollars  a  day,  not  to  exceed 250  00 

(R.  S.,  Art.  3844.) 

Note. — Filing  fees  should  be  returned  to  an  insurance  company  if  license  is 
not  granted.      (Opinion  of  Attorney  General,  April  14,  1908.) 

Shall  Keep  Fee  Book  and  Bender  Account  of  Fees  Quarterly. 

48.  It  shall  be  the  duty  of  the  Secretary  of  State,  Commissioner  of 
General  Land  Office,  Comptroller,  Treasurer,  Commissioner  of  Agricul- 
ture, Commissioner  of  Insurance  and  Banking,  State  Librarian,  Adju- 
tant General  and  Attorney  General,  respectively,  to  keep  fee  books  in 
their  several  offices,  in  which  they  shall  enter  all  the  fees  received  for 


16  INSURANCE  LAWS  OF  TEXAS. 

any  of  the  services  named  in  this  chapter,  and  they  shall  quarterly  file 
with  the  Comptroller  an  account  of  all  fees  so  received  by  them.,  respec- 
tively; which  accounts  shall  be  verified  by  the  affidavit  of  the  officer  ren- 
dering the  same,  and  such  officer  shall,  also  at  the  end  of  each  quarter, 
pay  over  to  the  Treasurer  of  the  State  all  moneys  received  by  them> 
respectively,  under  the  provisions  of  this  chapter.  (E.  S.,  Art.  3836.) 


CHAPTEE  III. 

INCOKPOEATION   OF   INSURANCE  COMPANIES — HOME   COMPANIES. 

Formation  of  Company. 

49.  Any  number  of  persons  desiring  to  form  a  company  for  the 
purpose  of  transacting  insurance  business  shall  adopt  and  sign  articles 
of  incorporation,  and  submit  the  same  to  the  Attorney  General,  and 
if  said  articles  shall  be  found  by  him  to  be  in  accordance  with  the  laws 
of  this  State,  and  of  the  United  States,  he  shall  attach  thereto  his  cer- 
tificate to  that  effect,  whereupon  such  articles  shall  be  deposited  with 
the  Commissioner  of  Insurance  and  Banking.     (E.  S.,  Art.  4705.) 

Note. — The  business  of  guaranteeing  titles  to  land  is  insurance  business,  and 
a  corporation  organized  and  chartered  under  this  statute  for  such  purpose 
must  conduct  its  business  under  the  supervision  of  the  Insurance  Department. 
(Opinion  of  Attorney  General,  May  1,  1913.) 

Articles  of  Incorporation  Shall  Contain. 

50.  Such  articles  shall  contain — 

(1)  The  name  of  the  company,  and  the  name  selected  shall  not  be 
so  similar  to  that  of  any  other  insurance  company  as  to  be  likely  to 
mislead  the  public. 

Note. — Courts  must  pass  upon  question  of  similarity  of  names.  (Attorney 
General's  opinion,  July  1,  1902.) 

(2)  The  locality  of  the  principal  business  office  of  such  company. 

(3)  The  kind  of  insurance  business  which  the  company  proposes  to 
engage  in, 

(4)  The  amount  of  its  capital  stock,  which  shall  in  no  case  be  less 
than  one  hundred  dollars.     (E.  S.,  Art.  4706.) 

Note. — A  corporation  issuing  certificates  guaranteeing  and  warranting  titles 
to  real  estate  is  an  insurance  company  and  its  charter  should  be  filed  with 
Commissioner  of  Insurance  and  Banking.  (Opinion  of  Attorney  General,  Jan- 
uary 29,  1910.) 

Duty  of  Commissioner  of  Insurance  When  Articles  Are  Deposited  With 
Him. 

51.  When  the   said  articles  of  incorporation  have  been   deposited 
with  the  Commissioner  of  Insurance  and  Banking,  and  the  law  in  all 
other  respects  has  been  complied  with  by  the  company,  the  Commissioner 
shall  make  an  examination,  or  cause  one  to  be  made  by  some  competent 
and  disinterested  person  appointed  by  him  for  that  purpose;  and  if  it 
shall  be  found  that  the  capital  stock  of  the  company,  to  the  amount 


INSURANCE  LAWS  OF  TEXAS.  17 

required  by  law,  has  been  paid  in,  and  is  possessed  by  it,  in  money  or  in 
such  stock,  notes,  bonds  or  mortgages  as  are  required  by  law,  and  that 
the  same  is  the  bond  fide  property  of  such  company,  and  that  such  com- 
pany has  in  all  respects  complied  with  the  law  relating  to  insurance, 
then  the  Commissioner  of  Insurance  and  Banking  shall  issue  to  such 
company  a  certificate  of  authority  to  commence  business  as  proposed  in 
their  articles  of  incorporation.  (R.  S.,  Art.  4707.) 

Note. — Certificates  of  stock  issued  by  a  fire  insurance  company,  which  stock 
was  not  paid  for  in  cash,  but  in  a  certificate  of  deposit  of  a  bank  due  at  a 
future  time,  were  unlawfully  issued,  and  should  be  canceled.  (Opinion  of 
Attorney  General,  November  13,  1912.) 

Company  Shall  Certify  Under  Oath  That  the  Capital  Is  Bona  Fide  Its 
Property. 

52.  The  corporators  or  officers  of  any  such  company  shall  be  required 
to  certify  under  oath  to  the  Commissioner  of  Insurance  and  Banking 
that  the  capital  exhibited  to  the  person  making  the  examination  is  the 
bona  fide  property  of  the  company  so  examined,  which  certificates  shall 
be  filed  and  recorded  in  the  office  of  the  Commissioner  of  Insurance  and 
Banking.     (R.  S.,  Art.  4708.) 

Where  Examination  Is  Made  by  Other  Than  Commissioner. 

53.  If  the  examination  be  made  by  any  other  person  than  the  Com- 
missioner of  Insurance  and  Banking,  the  finding  shall  be  certified  under 
the  oath  of  the  person  making  such  examination,  and  such  finding  and 
certificate  shall  be  filed  and  recorded  in  the  office  of  the  Commissioner 
of  Insurance  and  Banking.     (R.  S.,  Art.  4709.) 

Stock  Divided  Into  Shares. 

54.  The  stock  of  any  company  organized  under  the  laws  of  this 
State  shall  be  divided  into  shares  of  one  hundred  dollars  each.     (R.  S., 
Art.  4710.) 

Capital  Stock  Shall  Consist  of  What. 

55.  The  capital  stock  of  a  company  shall  consist : 

( 1 )  In  lawful  money  of  the  United  States ;  or 

(2)  In  the  bonds  of  this  State  or  any  county  or  incorporated  town 
or  city  thereof,  or  the  stock  of  any  national  bank;  or 

Heal  Estate  Must  Be  Worth  Double  Amount  Loaned  on  It. 

(3)  In  first  mortgages  upon  unencumbered  real  estate  in  this  State, 
the  title  to  which  is  valid  and  the  market  value  of  which  is  double  the 
amount  loaned  thereon,  exclusive  of  buildings,  unless  such  buildings  are 
insured  in  some  responsible  company  and  the  policy  or  policies  trans- 
ferred to  the  company  taking  such  mortgage.     (R.  S.,  Art.  4711.) 

Surplus  Money  May  Be  Invested,   How — Current  Value   of  Investment. 

56.  The  surplus  money  of  a  company  over  and  above  its  paid-up 
capital  stock  may  be  invested  in  or  loaned  upon  the  pledge  of  public 
stocks  or  bonds  of  the  United  States,  or  any  of  the  States,  or  stocks, 
bonds,  or  other  evidence  of  indebtedness  of  any  solvent  dividend-paying 


18  INSURANCE  LAWS  OF  TEXAS. 

corporation,  or  in  bills  of  exchange  or  other  commercial  notes  or  bills, 
except  its  own  stock;  provided  always  that  the  current  market  value  of 
such  stocks,  bonds,  notes,  bills,  or  other  evidences  of  indebtedness  shall 
be  at  all  times  during  the  continuance  of  such  loans  at  least  20  per  cent 
more  than  the  sum  loaned  thereon.  (E.  S.,  Art.  4712.) 

Note. — The  title  guaranty  companies  are  insurance  companies  and  are  subject 
to  the  insurance  laws.  A  title  guaranty  company  may  invest  part  of  its  capital 
in  an  abstract  plant  to  be  used  as  incident  to  its  business.  It  cannot  sell  ab- 
stracts to  the  public.  It  cannot  invest  any  part  of  its  capital  in  stock  of  an 
abstract  company,  but  may  invest  its  surplus  in  such  stock  as  an  investment, 
but  not  for  the  purpose  of  conducting  the  business  of  an  abstract  company. 
(Opinion  of  Attorney  General,  June  11,  1913.) 

Company  May  Change  and  Reinvest  Stock. 

57.  A  company  may  change  and  reinvest  its  capital  stock  in  like 
securities  as  occasion  may  from  time  to  time  require.      (E.  S.,  Art. 
4713.) 

Number  and  Qualification  of  Directors. 

58.  The  affairs  of  any  company  organized  under  the  laws  of  this 
State  shall  be  managed  by  not  more  than  thirteen  nor  fewer  than  seven 
directors,  all  of  whom  shall  be  stockholders  in  the  company.     (E.  S., 
Art.  4714.) 

Election  of  Directors. 

59.  Within  thirty  days  after  the  subscription  books  of  the  company 
have  been  filed,  a  majority  of  the  stockholders  shall  hold  a  meeting  for 
the  election  of  directors,  each  share  entitling  the  holder  thereof  to  one 
vote;  and  the  directors  then  in  office  shall  continue  in  office  until  their 
successors  have  been  duly  chosen  and  have  accepted  the  trust.     (E.  S., 
Art.  4715.) 

Annual  Meeting  for  Election  of. 

60.  The  annual  meeting  for  the  election  of  directors  of  a  company 
shall  be  held  during  the  month  of  January,  as  the  by-laws  of  the  com- 
pany may  direct.     (E.  S.,  Art.  4716.) 

Special  Meetings  for  Election  of. 

61.  If  from  any  cause  the  stockholders  should  fail  to  elect  directors 
at  an  annual  meeting,  they  may  hold  a  special  meeting  for  that  pur- 
pose, by  giving  thirty  days'  notice  thereof  in  some  newspaper  in  general 
circulation  in  the  county  in  which  the  principal  office  of  the  company 
is  located,  and  the  directors  chosen  at  such  special  meeting  shall  con- 
tinue in  office  until  their  successors  are  duly  elected  and  have  accepted. 
(E.  S.,  Art.  4717.) 

Quorum  of  Stockholders. 

62.  No  meeting  of  stockholders  shall  elect  directors  or  transact  such 
other  business  of  the  company  unless  there  shall  be  present  at  such 
meeting,  in  person  or  by  proxy,  a  majority  in  value  of  the  stockholders 
equal  to  two-thirds  of  the  stock  of  such  company.     (E.  S.,  Art.  4718.) 


INSURANCE  LAWS  OF  TEXAS.  19 

Directors  Shall  Choose  President  and  Other  Officers. 

63.  The  directors  shall  choose  by  ballot  from  their  own  number  a 
president  and  such  other  officers  as  the  by-laws  of  the  company  may 
designate,  who  shall  perform  such  duties,  receive  such  compensation 
and  give  such  security  as  the  by-laws  of  such  company  may  require. 
(E.  S.,  Art.  4719.) 

Directors  to  Make  By-Laws. 

64.  The  directors  may  ordain  and  establish  such  by-laws  and  regu- 
lations, not  inconsistent  with  law,  as  shall  appear  to  them  necessary 
for  regulating  and  conducting  the  business  of  the  company.     (R.  S., 
Art.  4720.) 

Shall  Keep  a  Record  of  Transactions. 

65.  It  shall  be  the  duty  of  the  directors  to  keep  a  full  and  correct 
record  of  their  transactions,  which  shall  at  all  times  during  business 
hours  be  open  to  the  inspection  of  the  stockholders  and  other  persons 
interested  therein.     (R.  S.,  Art.  4721.) 

Shall  Fill  Vacancies — What  Shall  Constitute  a  Quorum. 

66.  The  directors  shall  fill  all  vacancies  which  shall  occur  in  the 
board  or  in  any  of  the  offices  of  the  company,  and  a  majority  of  the 
board  shall  constitute  a  quorum  for  the  transaction  of  business.     (R.  S., 
Art.  4722.) 

General  Incorporation  Law  Shall  Apply. 

67.  The  laws  relating  to  and  governing  corporations  in  general  shall 
apply  to  and  govern  insurance  companies  incorporated  in  this  State 
in  so  far  as  the  same  may  not  be  inconsistent  with  the  provisions  of 
this  title.     (R.  S.,  Art.  4723.) 


CHAPTER  IV. 

LIFE,   HEALTH   AND   ACCIDENT   INSURANCE   COMPANIES — HOME. 

Terms  Denned. 

68.  A  life  insurance  company  shall  be  deemed  to  be  a  corporation 
doing  business  under  any  charter  involving  the  payment  of  money  or 
other  thing  of  value,  conditioned  on  the  continuance  or  cessation  of 
human  life,  or  involving  an  insurance,  guaranty,  contract  or  pledge  for 
the  payment  of  endowments  or  annuities.  An  accident  insurance  com- 
pany shall  be  deemed  to  be  a  corporation  doing  business  under  any  char- 
ter involving  the  payment  of  money  or  other  thing  of  value,  conditioned 
upon  the  injury,  disablement  or  death  of  persons  resulting  from  travel- 
ing or  general  accidents  by  land  or  water.  A  health  insurance  company 
shall  be  deemed  to  be  a  corporation  doing  business  under  any  charter 
involving  the  payment  of  any  amount  of  money  or  other  thing  of  value, 
conditioned  upon  loss  by  reason  of  disability  due  to  sickness  or  ill  health. 
When  consistent  with  the  context  and  not  obviously  used  in  a  different 
sense,  the  term  "company'5  or  "insurance  company,"  as  used  herein, 


20  INSURANCE  LAWS  or  TEXAS. 

includes  all  corporations  engaged  as  principals  in  the  business  of  life, 
accident  or  health  insurance.  The  term  "home"  or  domestic  company, 
as  used  herein,  designates  those  life,  accident  or  life  and  accident,  health 
and  accident,  or  life,  health  and  accident  insurance  companies  incorpo- 
rated and  formed  in  this  State.  The  term  "foreign  company"  means  any 
life,  accident  or  health  insurance  company  organized  under  the  laws 
of  any  other  State  or  Territory  of  the  United  States,  or  foreign  country. 
The  term  "home  office"  of  a  company  means  its  principal  office  within 
the  State  or  country  in  which  it  is  incorporated  and  formed.  The  "in- 
sured" or  "policyholder"  is  the  person  on  whose  life  a  policy  of  insurance 
is  effected.  The  "beneficiary"  is  the  person  to  whom  a  policy  of  insur- 
ance effected  is  payable.  By  the  term  "net  assets"  is  meant  the  funds  of 
the  company  available  for  the  payment  of  its  obligations  in  this  State, 
including  uncollected  premiums  not  more  than  three  months  past  due 
and  deferred  premiums  on  policies  actually  in  force,  after  deducting 
from  such  funds  all  unpaid  losses  and  claims  for  losses,  and  all  other 
debts,  exclusive  of  capital  stock.  The  "profits"  of  a  company  are  that 
portion  of  its  funds  not  required  for  the  payment  of  losses  and  expenses, 
nor  set  apart  for  any  other  purpose  required  by  law.  (E.  S.,  Art.  4724.) 

Note. — A  contract  of  an  insurance  company  in  which  the  company  undertakes 
to  indemnify  the  mayor  of  a  city  for  the  benefit  of  every  person  who  shall  sus- 
tain bodily  injury  through  the  negligent  operation  of  an  automobile,  and  for 
the  benefit  of  every  passenger  injured  or  negligently  allowed  to  be  injured  by 
an  employe  of  the  principal,  is  an  accident  or  casualty  insurance  policy  rather 
than  a  surety  bond.  (Opinion  of  Attorney  General,  August  8,  1921.) 

Who  May  Incorporate — What  Articles  of  Incorporation  Shall  Contain. 

69.  Any  three  or  more  citizens  of  this  State  who  shall  be  known  as 
corporators,  may  associate  themselves  for  the  purpose  of  forming  a  life 
insurance  company,  or  accident  insurance  company,  or  life  and  acci- 
dent, health  and  accident,  or  life,  health  and  accident  insurance  com- 
pany, provided,  that  no  such  company  shall  transact  more  than  one 
of  the  foregoing  classes  of  business,  except  in  separate  and  distinct 
departments.  In  order  to  form  such  a  company  the  corporators  shall 
sign  and  acknowledge  its  articles  of  incorporation  before  any  officer 
authorized  to  take  acknowledgments  to  deeds,  and  file  the  same  in  the 
office  of  the  Commissioner  of  Insurance  and  Banking.  Such  articles  of 
incorporation  shall  specify: 

(a)  The  name  and  place  of  residence  of  each  of  the  incorporates. 

(b)  The  name  of  the  proposed  company,  which  shall  contain  the 
words  "insurance  company"  as  a  part  thereof,  and  which  must  not  so 
closely  resemble  the  name  of  any  existing  company  transacting  insur- 
ance business  in  this  State  as  to  mislead  the  public. 

Note. —  ( 1 )  The  Commissioner  of  Insurance  and  Banking  has  no  authority  to 
pass  upon  question  of  similarity  of  names.  (Opinion  of  Attorney  General, 
August  25,  1906.) 

(2)  A  foreign  or  domestic  corporation  is  not  entitled  to  the  use  of  the  same 
or  a  similar  corporate  name  in  the  same  general  territory  as  would  render  de- 
ception of  the  public  as  well  as  injury  to  the  first  user  of  the  corporate  name 
probable.  (Opinion  of  Attorney  General,  June  16,  1921.) 

(c)  The  location  of  its  home  office. 

(d)  The  kind  or  kinds  of  insurance  business  it  purposes  to  transact. 


INSURANCE  LAWS  OF  TEXAS.  21 

(e)  The  amount  of  its  capital  stock,  not  less  than  $100,000,  all  of 
which  capital  stock  must  be  subscribed  and  fully  paid  up  and  in  the 
hands  of  the  corporators  before  said  articles  of  incorporation  are  filed, 
such  capital  stock  to  be  divided  into  shares  of  $100  each. 

Note. —  (1)  A  share  of  stock  of  a  life  insurance  company  cannot  be  divided 
and  sold  in  fractional  parts  of  a  share.  (Opinion  of  Attorney  General,  August 
3,  1909.) 

(2)  Stock,  paid  for  in  notes  or  other  evidence  of  promise  to  pay,  cannot 
be  lawfully  issued,  and  unless  fully  paid  for  and  issued,  it  cannot  be  voted. 
A  stock  subscription  agreement,  failing  to  show  what  portion  of  money  paid 
under  it  is  used  for  promotion  and  commissions  for  selling  the  stock,  is  fraud- 
ulent. (Opinion  of  Attorney  General,  September  10,  1909.) 

(f)  The  period  of  time  it  is  to  exist,  which  shall  not  exceed  five 
hundred  years. 

(g)  The  number  of  shares  of  such  capital  stock. 

(h)  Such  other  provisions  not  inconsistent  with  the  law  as  the  cor- 
porators may  deem  proper  to  insert  therein.  (R.  S.,  Art.  4725.) 

Fee  for  Filing  Articles  of  Incorporation — Duties  of  Commissioner  When 
Articles  Are  Filed. 

70.  When  such  articles   of  incorporation   are  filed  with  the   Com- 
sioner  of  Insurance  and  Banking,  together  with  an  affidavit  made  by 
two  or  more  of  its  incorporators  that  all  the  stock  has  been  subscribed 
in  good  faith  and  fully  paid  for,  together  with  a  charter  fee  of  $20, 
it  shall  be  the  duty  of  the  Commissioner  to  submit  such  articles   of 
incorporation  to  the  Attorney  General  for  examination,  and  if  he  ap- 
proves the  same  as  conforming  with  the  law  he  shall  so  certify  and 
deliver  such  articles  of  incorporation,  together  with  his  certificate  of  ap- 
proval attached  thereto,  to  the  Commissioner  of  Insurance  and  Banking, 
who  shall,  upon  receipt  thereof,  record  the  same  in  a  book  kept  for  that 
purpose,  and  upon  receipt  of  a  fee  of  $1.00  he  shall  furnish  a  certified 
copy  of  the  same  to  the  corporators,  upon  which  they  shall  be  a  body 
politic  and  corporate,  and  may  proceed  to  complete  the  organization  of 
the  company,  for  which  purpose  they  shall  forthwith  call  a  meeting  of 
the  stockholders,  who  shall  adopt  by-laws  for  the  government  of  the 
company,  and  elect  a  board  of  directors,  not  less  than  five,  composed  of 
stockholders,  which  board  shall  have  full  control  and  management  of 
the  affairs  of  the  corporation,  subject  to  the  by-laws  thereof  as  adopted 
or  amended  from  time  to  time  by  the  stockholders  or  directors  and  to 
the  laws  of  this  State.    The  board  of  directors  so  elected  shall  serve  until 
the  second  Tuesday  in  March  thereafter,  on  which  date  annually  there- 
after there  shall  be  held  an  annual  meeting  of  the  stockholders  at  the 
home  office,  and  a  board  of  directors  elected  for  the  ensuing  year.     At 
all  meetings  of  the  stockholders,  each  stockholder  shall  be  entitled  to 
one  vote  for  each  share  of  stock  fully  paid  up  appearing  in  his  name  on 
the  books  of  the  company,  which  vote  may  be  given  in  person  or  by 
written  proxy.     The  majority  of  the  paid-up  capital  stock  at  any  meet- 
ing of  the  stockholders  shall  constitute  a  quorum.     (R.  S.,  Art.  4726.) 

Charter  May  Be  Amended — Capital  Stock  May  Be  Increased  or  Reduced. 

71.  At  any  regular  meeting  or  called  meeting  of  the  stockholders 


22  INSURANCE  LAWS  OF  TEXAS. 

they  may,  by  resolution,  provide  for  any  lawful  amendment  to  the 
charter  or  articles  of  incorporation,,  and  such  amendment,  accompanied 
by  a  copy  of  such  resolution  duly  certified  by  the  president  and  secretary 
of  the  company,  shall  be  filed  and  recorded  in  the  same  manner  as  the 
original  charter,  and  shall  thereupon  become  effective.  Stockholders 
representing  a  majority  of  the  capital  stock  of  any  such  company  may  in 
such  manner  also  increase  or  reduce  the  amount  of  its  capital  stock; 
provided,  that  the  capital  stock  shall  in  no  case  be  reduced  to  less  than 
$100,000  fully  paid  up.  A  statement  of  any  such  increase  or  reduction 
shall  be  signed  and  acknowledged  by  two  officers  of  the  company  and 
filed  and  recorded  along  with  the  certified  copy  of  the  resolution  of  the 
stockholders  provided  therefor  in  the  same  manner  as  the  charter  or 
amendment  thereto.  For  any  such  increase  or  reduction  the  company 
may  require  the  return  of  the  original  certificates  as  other  evidences  of 
stock  in  exchange  for  new  certificates  issued  in  lieu  thereof.  (K.  S., 
Art.  4727.) 

Note. —  (1)  A  charter  cannot  be  amended  prior  to  meetings  of  stockholders 
called  by  the  corporators  for  adoption  of  by-laws  and  election  of  board  of 
directors.  The  corporators  cannot  sell  or  assign  their  right  or  interest  in  the 
charter  nor  in  the  unorganized  corporation.  The  assignee  of  such  corporators, 
acting  alone  or  with  the  corporators  who  did  not  assign  or  sell  out,  cannot 
amend  the  charter  nor  call  a  meeting  of  stockholders  to  adopt  by-laws  and  elect 
a  board  of  directors.  The  subscribers  to  the  capital  stock  are  not  stockholders 
and  cannot  amend  the  charter  prior  to  being  called  together  by  the  corporators 
to  adopt  by-laws  and  elect  a  board  of  directors.  After  being  called  together  by 
the  corporators,  and  after  the  adoption  of  by-laws  and  election  of  a  board  of 
directors,  the  subscribers  to  the  stock  thereupon  become  stockholders  and  may 
amend  the  charter,  notwithstanding  the  fact  that  no  certificate  of  authority  to 
do  business  has  been  issued.  (Opinion  of  Attorney  General,  April  2,  1910.) 

(2)  A  life  insurance  company  having  amended  its  charter  and  reduced  its 
capital  stock  from  $150,000  to  $100,000,  the  par  value  of  each  share  being  $100, 
should    recall   the   certificates    of    stock   representing   the   reduction    and    cancel 
them.     Should  a  shareholder  own  a  number  of  shares  not  capable  of  being  so 
divided  as  to  leave  his  interest  in  the  capital  stock  as  a  multiple  of   100,  he 
should  retain  the  whole   shares   and  the  company   should  issue  to  him  a   cer- 
tificate of  interest  showing  the  fractional  part  of  a  share  of  which  he  is  owner. 
(Opinion  of  Attorney  General,  February  18,  1919.) 

(3)  The  reduction  of  its  capital  stock  by  a  life  insurance  company  for  the 
purpose  of  distributing  ratably  among  its  stockholders  the  proceeds  of  such  re- 
duction would  be  for  an  illegal  purpose,  in  that  it  would  be  the  payment  of  a 
dividend  from  funds  other  than  profits  made  by  said  company  as  prohibited  by 
Articles  4738  and  4763  of  the  Revised  Statutes  of  Texas.     (Opinion  of  Attorney 
General,  February  16,  1920.) 

Fractional  Shares  of  Stock  May  Be  Voted  Whenever  Capital  of  Company 
Shall  Have  Been  Reduced  as  Provided  by  Law. 

72.  Whenever  any  corporation  organized  under  the  laws  of  the  State 
of  Texas  shall  reduce  its  capital  stock  under  the  provisions  of  law  ap- 
plying thereto,  and  by  reason  thereof,  fractional  shares  of  its  stock 
shall  be  issued  to  or  held  by  any  of  its  stockholders,  the  holder  of  any 
such  fractional  share  or  shares  shall  be  entitled  to  vote  the  same  at  any 
meeting  of  the  stockholders  in  accordance  with  the  proportionate  or 
ratable  value  of  such  share  or  shares.  (Sec.  1,  Chap.  112,  Acts  Thirty- 
sixth  Legislature.) 


INSURANCE  LAWS  OF  TEXAS.  23 

Shares  of  Stock  Shall  Be  Transferable. 

73.  The  shares  of  stock  of  such  company  shall  be  transferable  on 
its  books  in  accordance  with  law  and  the  by-laws  of  the  company  by 
the  owner  in  person  or  his  authorized  agent,  and  every  person  becom- 
ing a  stockholder  by  such  transfer  shall  succeed  to  all  rights  of  the 
former  holder  of  the  stock  transferred,  by  reason  of  such  ownership. 
(E.  S.,  Art.  4727.) 

Shall  Be  Examined  When — Certificate  of  Authority  Issued. 

74.  When  the  first  meeting  of  the  stockholders  shall  be  held  and 
the  officers  of  the  company  elected  it  shall  be  the  duty  of  the  president 
or  secretary  to  notify  the  Commissioner  of  Insurance  and  Banking, 
and  he  shall  thereupon  immediately  make  or  cause  to  be  made  at  the 
expense  of  the  company  a  full  and  thorough  examination  thereof,  and 
if  he  shall  find  that  all  of  the  capital  stock  of  the  company,  amounting 
to  not  less  than  $100,000,  has  been  fully  paid  up  and  is  in  the  custody 
of  the  officers,  either  in  cash  or  securities  of  the  class  in  which  such 
companies  are  authorized  by  this  chapter  to  invest  or  loan  their  funds, 
he  shall  issue  to  such  company  a  certificate  of  authority  to  transact  such 
kind  or  kinds  of  insurance  business  within  this  State  as  such  officers 
may  apply  for  and  as  may  be  authorized  by  its  charter,  which  certificate 
shall  expire  on  the  last  day  of   February  next  after  the  date  of  its 
issuance.     Before  such  certificate  is  issued  not  less  than  two  officers  of 
such  company  shall  execute  and  file  with  the  Commissioner  of  Insurance 
and  Banking  a  sworn  schedule  of  all  the  assets  of  the  company  exhibited 
to  him  upon  such  examination,  showing  the  value  thereof,  together  with 
a  sworn  statement  that  the  same  are  bona  fide,  the  unconditional  and 
unencumbered  property  of  the  company  and  are  worth  the   amounts 
stated  in  such  schedule.     No  original  or  first  certificate  of  authority 
shall  be  granted  except  in  conformity  herewith,  regardless  of  the  date 
of  filing  of  the  articles  of  incorporation  with  the  Commissioner  of  In- 
surance and  Banking.     (E.  S.,  Art.  4728.) 

Annual  Statement,   Shall  Contain — Commissioner  May  Change  Form  of. 

75.  Each  life  insurance  company,  or  accident  insurance  company, 
or  life  and  accident,  health  and  accident,  or  life,  health  and  accident 
insurance  company,  organized  under  the  laws  of  this  State,  shall,  after 
the  first  day  of  January  of  each  year  and  before  the  first  day  of  March 
following,  and  before  the  renewal  of  its  certificate  of  authority  to  trans- 
act business,  prepare  under  oath  of  two  of  its  officers,  and  deposit  in  the 
office  of  Commissioner  of  Insurance  and  Banking,  a  statement  accom- 
panied with  the  fee  for  filing  annual  statements  of  $10,  showing  the 
condition  of  the  company  on  the  31st  day  of  December  the  next  pre- 
ceding, which  shall  include  a  statement  in  detail,  showing  the  character 
of  its  assets  and  liabilities  on  that  date,  the  amount  and  character  of 
business  transacted,  moneys  received  and  how  expended  during  the  year, 
and  the  number  and  amount  of  its  policies  in  force  on  that  date  in  Texas, 
and  the  total  amount  of  all  policies  in  force;  and  the  Commissioner  of 
Insurance  and  Banking  may  from  time  to  time  make  such  changes  in  the 
form  and  requirements  of  the  annual  statements  of  companies  as  shall 
seem  to  him  best  adapted  to  elicit  from  the  companies  a  true  exhibit  of 


£4  INSURANCE  LAWS  OF  TEXAS. 

their  condition  and  methods  of  conducting  business,  and  such  state- 
ment shall  also  contain  and  set  forth  an  exhibit  of  the  investments  of 
such  company;  provided,  that  such  terms  and  requirements  shall  elicit 
only  such  information  as  shall  pertain  to  the  business  of  the  company. 
(E.  S.,  Art.  4729.) 

Renewal  Certificate  of  Authority,  Issued  When. 

76.  Whenever   any   life   insurance   company   or   accident   insurance 
company  or  life  and  accident,  or  health  and  accident,  or  life,  health 
and  accident  insurance  company  transacting  insurance  business  in  this 
State  shall  have  filed  its  annual  statement  in  accordance  with  the  pre- 
ceding article,  showing  a  condition  which  entitles  it  to  transact  busi- 
ness in  this  State  in  accordance  with  the  provisions  of  this  chapter,  the 
Commissioner  of  Insurance  and  Banking  shall,  upon  receipt  of  a  fee 
of   $1.00,   issue   a   renewal   certificate   of   authority   to   such   company, 
which  shall  expire  on  the  last  day  of  February  of  the  subsequent  year. 
(R.  S.,  Art.  4730.) 

Shall  Receive  Certified  Copy  of    Certificate  of  Authority  for  Agents. 

77.  Any  such  company  organized  under  the  laws  of  this  State,  hav- 
ing received  authority  from  the  Commissioner  of  Insurance  and  Bank- 
ing to  transact  business  in  this  State,  shall  receive  from  such  Commis- 
sioner upon  written  request  therefor  a  certified  copy  of  this  certificate 
of  authority  for  each  of  its  agents  in  this  State.     (R.  S.,  Art.  4731.) 

Actions  by  Company  or  Policyholder. 

78.  Actions  may  be  maintained  by  a  company  organized  under  the 
laws  of  this  State  against  any  of  its  policyholders,  stockholders,  or  other 
persons  for  any  cause  relating  to  the  business  of  such  company,  and 
actions  may  also  be  prosecuted  and  maintained  by  any  policyholder  or 
the  heirs  or  legal  representative  of  any  such  policyholder  against  the 
company  for  losses  which  accrue  on  any  policy,  but  no  action  shall  be 
brought  or  maintained  by  any  person  other  than  the  Commissioner  of 
Insurance   and   Banking   of   this   State   for   the   enjoining,   restraining 
or  interfering  with  the  prosecution  of  the  business   of  the   company. 
(R.  S.,  Art.  4732.) 

Laws  Relating  to  Corporations  Shall  Govern. 

79.  The  laws  relating  to  and  governing  corporations  in  general  shall 
apply  to  and  govern  companies  organized  under  this  chapter,  in  so  far 
as  the  same  are  pertinent  and  not  in  conflict  with  the  provisions  of  this 
chapter.     (R.  S.,  Art.  4733.) 

May  Invest  in  or  Loan  Upon,  What  Securities. 

80.  A  life  insurance  company  organized  under  the  laws  of  this  State 
may  invest  in  or  loan  upon  the  following  securities,  viz. : 

(a)  It  may  invest  any  of  its  funds  or  accumulations  in  the  bonds 
of  the  United  States,  or  of  any  State,  county  or  city  of  the  United 
States,  or  the  bonds  of  any  independent  or  common  school  district,  or 
first  mortgage  bonds  of  any  dividend-paying  railroad  or  electric  rail- 


INSURANCE  LAWS  or  TEXAS.  25 

way  company  duly  incorporated  under  the  laws  of  the  United  States 
or  any  State  thereof. 

(b)  It  may  loan  any  of  its  funds  and  accumulations,  taking  as 
security  therefor  such  collateral  as  under  the  previous  subdivision  it 
may  invest  in;  and  upon  first  liens  upon  real  estate,  the  title  to  which 
is  valid,  and  the  value  of  which  is  double  the  amount  loaned  thereon ; 
provided,  that  if  any  part  of  such  value  is  in  buildings,  such  build- 
ings shall  be  insured  against  loss  by  fire  for  at  least  50  per  cent  of  the 
value  thereof,  with  loss  clause  payable  to  such  company.  It  may  also 
make  loans  upon  the  security  of  or  purchase  its  own  policies,  but  no 
loan  on  any  policy  shall  exceed  the  reserve  value  thereof.  No  invest- 
ment or  loan,  except  policy  loans,  shall  be  made  by  any  such  insurance 
company  unless  the  same  shall  first  have  been  authorized  by  the  board 
of  directors,  or  by  committee  charged  with  the  duty  of  supervising  such 
investments  or  loans.  No  such  company  shall  subscribe  to,  or  participate 
in,  any  underwriting  of  the  purchase  or  sale  of  securities  or  property 
or  enter  into  any  such  transaction  for  such  purpose  or  sell  on  account 
of  such  company  jointly  with  any  other  person,  firm  or  corporation; 
nor  shall  any  such  company  enter  into  any  agreement  to  withhold  from 
sale  any  of  its  property;  but  the  disposition  of  its  property  shall  be  at 
all  times  within  the  control  of  its  board  of  directors.  Every  such  com- 
pany possessed  of  assets  not  authorized  by  this  chapter  shall  dispose  of 
the  same  within  five  years  after  July  10,  1909,  unless  such  time  is  ex- 
tended for  good  cause  by  the  Commissioner  of  Insurance  and  Banking. 
(E.  S.,  Art.  4734.) 

Note. —  (1)  A  company  may  invest  its  funds  in  a  portion  of  a  series  of  notes 
or  bonds,  secured  by  first  lien  on  real  estate -worth  double  amount  of  entire 
loan.  (Opinion  of  Attorney  General,  August  10,  1910.) 

(2)  A  life  insurance  company   cannot  invest  in   bonds   of  the   Republic   of 
Mexico.     (Opinion  of  Attorney  General,  November  3,  1910.) 

(3)  A   life   insurance   company   may   make   loan   to   a    church,   where   it  is 
secured  by  bonds  constituting  a  first  lien  on  real  estate.      (Opinion  of  Attorney 
General,  June  17,  1911.) 

(4)  A   home   life    insurance    company    cannot   lawfully    count,    as    admitted 
assets,  time  certificates  of  deposit  which  are  not  due  or  payable  on  demand  by 
the  bank  issuing  them.      (Opinion  of  Attorney  General,  April  2,  1912.) 

(5)  A   life   insurance   company,    chartered   in   Texas,    may    lawfully   borrow 
money  and  pledge  its  assets  as  security,  and  the  excess  of  such  collateral  may 
be  regarded  as  available  or  admitted  assets  of  the  company.     An  investment  in 
paper   secured   by   real   estate  worth   less   than   double  amount  of   loan   is   not 
void,  but  is  unauthorized  and  therefore  an  ultra  vires  act,  but  where  amount 
is  small  and  is  part  of  purchase  and  sale  of  an  office  building  is  not  ground 
for  withholding  permit  to  the  company  or  declining  to  consider  the  investment 
as  part  of  its  available  assets.      (Attorney  General's  opinion,  March  15,  1915.) 

(6)  Loans  made  by  a  company  to  its  agents  are  without  authority  of  law. 
"Advances"   may  be  divided   into   three   classes:      First,   gifts   which   would   be 
clearly  unlawful ;   second,  money  advanced  in  anticipation  of  a  debt  to  mature 
at  some  future  time,  and  if  in  insignificant  amounts,  they  would  probably  be 
lawful,  otherwise  they  would  be  in  open  violation  of  the  law;   and,  third,  money 
put  in  the  hands  of  an  agent  to  be  expended  in  the  management  of  the  business 
of  his  principal,  and  advances  made  in  this  way  and  for  this  purpose  would  be 
lawful.     Whether  or  not  an  "advance"  is  a  lawful  one,  or  whether  a  loan  is  in 
violation  of  law  is  a  question  of  fact.      (Attorney  General's  opinion,  August  9, 
1916.) 


26  INSURANCE  LAWS  OF  TEXAS. 

Real  Estate,  May  Hold. 

81.  Every  such  insurance  company  may  secure,  hold  and  convey 
real   property   only  for  the  following  purposes   and   in   the   following 
manner : 

1.  One  building  site  and  office  building  for  its  accommodation  in 
the  transaction  of  its  business  and  for  lease  and  rental. 

2.  Such  as  shall  have  been  acquired  in  good  faith  by  way  of  secur- 
ity for  loans  previously  contracted,  or  for  moneys  due. 

3.  Such  as  shall  have  been  conveyed  to  it  in  the  satisfaction  of 
debts  previously  contracted  in  the  course  of  its  dealings. 

4.  Such  as  shall  have  been  purchased  at  sales  under  judgment  or 
decrees  of  court,  or  mortgage,  or  other  liens  held  by  such  company. 

Note. —  (1)  A  company  may  invest  in  a  lot,  for  an  office  building,  upon 
which  there  is  an  encumbrance,  provided  the  company  definitely  undertakes  to 
pay  off  the  encumbrance.  (Opinion  of  Attorney  General,  August  10,  1910.) 

(2)  The  word  "purchase,"  in  this  statute,  means  acquired  either  by  pur- 
chase or  rental.  A  life  insurance  company  has  the  right  to  secure,  hold  and 
convey  a  lease  on  a  building  for  a  period  of  time,  with  option  of  purchase  at 
expiration  of  lease.  .The  aggregate  amount  to  be  paid  for  the  lease  extend- 
ing over  a  long  period  of  time  is  not  a  debt  which  could  amount  to  an  impair- 
ment of  the  capital  of  the  company.  Ownership  of  such  building  or  lease  is 
a  chattel  real  and,  as  such,  is  real  property  and  the  investment  is  lawful. 
(Opinion  of  Attorney  General,  June  22,  1914.) 

All  such  real  property  specified  in  Subdivisions  2,  3  and  4,  of  this 
article,  which  shall  not  be  necessary  for  its  accommodation  in  the  con- 
venient transaction  of  its  business  shall  be  sold  and  disposed  of  within 
five  years  after  the  company  shall  have  acquired  title  to  the  same,  or 
within  five  years  after  the  -same  shall  have  ceased  to  be  necessary  for 
the  accommodation  of  its  business,  and  it  shall  not  hold  such  property 
for  a  longer  period  unless  it  shall  procure  a  certificate  from  the  Com- 
missioner of  Insurance  and  Banking  that  its  interests  will  suffer  ma- 
terially by  the  forced  sale  thereof;  in  which  event  the  time  for  the  sale 
may  be  extended  to  such  time  as  the  Commissioner  shall  direct  in  such 
certificate.  (E.  S.,  Art.  4735.) 

Directors  Shall  Not  Receive  Money  in  Connection  With  Nor  Be  Interested 
in  Purchase,  Loan  or  Sale  of  Company. 

82.  No  director  or  officer  of  any  insurance  company  transacting  busi- 
ness in  this  State,  or  organized  under  the  laws  of  this  State,  shall  re- 
ceive any  money  or  valuable  thing  for  negotiating,  procuring,  recom- 
mending or  aiding  in  any  purchase  or  sale  by  such  company  of  any 
property  or  any  loan  from  such  company,  nor  be  pecuniarily  interested, 
either  as  principal,  co-principal,  agent  or  beneficiary,  in  any  such  pur- 
chase, sale  or  loan;  provided,  that  nothing  contained  in  this  article  shall 
prevent  a  life  insurance  corporation  from  making  a  loan  upon  a  policy 
held  therein  by  the  borrower  not  in  excess  of  the  reserve  value  thereof. 
Any  person  violating  any  provisions  of  this  article  shall  be  guilty  of 
a  misdemeanor,  and  upon  conviction  .thereof  shall  be  punished  by  fine 
of  not  less  than  $300  nor  more  than  $1000.     (E.  S.,  Art.  4736.     P.  C., 
Art.  687.) 

Note. —  (1)     See  Section  113. 

(2)     It  is  unlawful  for  a  company  to  buy  securities  from  or  sell  securities 


INSURANCE  LAWS  OF  TEXAS.  27 

to  or  loan  money  to  a  banking  or  other  corporation  in  which  the  officers  or 
directors  of  the  life  insurance  company  are  interested  as  stockholders,  officers 
or  directors.  (Opinion  of  Attorney  General,  August  10,  1910.) 

(3)  A  life  insurance  company  may  lease  a  property  from  another  corpora- 
tion, notwithstanding  certain  officers  of  the  insurance  company  are  also  officers 
and  large  stockholders  of  the  other  corporation.      (Opinion  of  Attorney  Gen- 
eral, March  27,  1911.) 

(4)  The  president  of  a  fire  insurance  company  may  lawfully  sell  the  capital 
stock  of  his  company  on  commission.      (Opinion  of  Attorney  General,  August 
3,  1911.) 

(5)  A  life  insurance  company  ordinarily  has  no  authority  to  buy  or  sell 
its  own  stock.     Exigencies,  however,  might  arise  where  the  buying  of  its  own 
stock  would  be  to  the  interest  of  the  company,  and  where  such  occasions  arise 
and  there  is  no  fraud  in  the  transaction,  it  would  probably  not  be  in  violation 
of  law.     In  such  cases,  the  certificate  of  authority  of  the  company  should  not 
be  revoked  by  the  Commissioner,  but  the  company  should  be  required  to  file 
with  him  a  transcript  of  all  minutes,  correspondence  and  other  papers  connected 
with  the  transaction.     (Opinion  of  Attorney  General,  February  19,  1914.) 

(6)  An  accident  and  health  insurance  company  organized  under  Texas  laws, 
any  of  whose  officers  or  directors  are  likewise  officers  or  directors  of  a  loan 
and  trust  company  cannot  lawfully  make  such  loan  and  trust  company  its  fiscal 
agent.     The  fact  that  the  officers  or  directors  of  such  insurance  company  are 
stockholders   of   a   loan  and   trust   company   would   not  prevent   the    insurance 
company    from   employing   such   loan   and   trust    company    as    its    fiscal    agent. 
(Opinion  of  Attorney  General,  April  16,  1914.) 

(7)  As  a  general  rule,  the  directors  of  a  life  insurance  company  could  not 
lawfully  be  the  directors  of  a  corporation  lessee  of  the  life  insurance  company; 
but  where  the  stockholders  of  the  life  insurance  company  authorize  some  of  its 
directors  to  organize  and  become  directors  in  a  corporation  for  the  purpose  of 
taking  over  a  lease  made  by  such  insurance  company  to  an  individual,  in  order 
that  the  individual's  part  of  the  contract  under  the  lease  might  be  carried  out 
and  the  insurance  company's  interest  therein  preserved,  the  general  rule  would 
not  apply.     (Opinion  of  Attorney  General,  December  17,  1915.) 

(8)  A  life  insurance  company  would  have  no  authority  to  purchase  its  own 
stock  and  hold  same  subject  to  resale  at  a  price  not  in  excess  of  the  price  paid 
for  it,  and  where  no  one  would  be  benefited  except  the  stockholder  selling  his 
stock.      (Opinion  of  Attorney  General,  April  8,  1921.) 

May  Reinsure. 

83.  Any  life  insurance  company  organized  under  the  laws  of  this 
State  may  reinsure  in  any  insurance  company  authorized  to  transact 
business  in  this  State  any  risk  or  part  of  a  risk  which  it  may  assume; 
provided,  that  no  such  company  shall  have  the  power  to  so  reinsure 
its  entire  outstanding  business  until  the  contract  therefor  shall  be  sub- 
mitted to  the  Commissioner  of  Insurance  and  Banking  and  be  by  him 
approved  as  protecting  fully  the  interests  of  all  the  policy  holders.    (R.  S., 
Art.  4737.) 

Note. — A  foreign  life  insurance  company  may  lawfully  reinsure  the  business 
of  a  Texas  life  insurance  company  which  deposits  securities  covering  its  re- 
serves with  the  Commissioner  of  Insurance  and  Banking.  (Opinion  of  Attor- 
ney General,  January  16,  1915.) 

Dividends,  Shall  Not  Pay,  Except  From  Profits. 

84.  No  life  insurance  company  organized  under  the  laws  of  this 
State  shall  declare  or  pay  any  dividends  to  its  policyholders  except 
from  the  profits  made  by  such  company;  provided,  that  this  shall  not 
prohibit  the  issuance  of  policies  guaranteeing  a  definite  payment,  or 


28  INSURANCE  LAWS  OF  TEXAS. 

reduction  in  premiums,  not  exceeding  the  expense  of  loading  on  said 
premiums,  but  where  said  reduction  exceeds  said  expense  loading  the 
proper  reserve  therefor  must  be  held  by  the  company  to  provide  for 
the  deficiency  so  arising  in  the  net  premium;  and,  provided  further, 
that  this  shall  not  apply  to  payments  to  holders  of  special  or  board 
contracts  heretofore  issued.  No  such  life  insurance  company  shall  de- 
clare or  pay  any  dividends  to  its  stockholders  except  from  the  profits 
made  by  said  company,  not  including  surplus  arising  from  the  sale  of 
stock.  (R.  S.,  Art.  4738.) 

Note. — The  issuance  of  guaranteed  dividend  policies  is  not  prohibited.      (Opin- 
ion of  Attorney  General,  January  5,  1911.) 

Salaries,  Shall  Not  Pay  Excessive. 

85.  No  domestic  life  insurance  company  shall  pay  any  salary,  com- 
pensation or  emolument  to  any  officer,  trustee  or  director  thereof,  nor 
any   salary,   compensation   or   emolument   amounting   in    any   year   to 
more  than  $5000  to  any  person,  firm  or  corporation,  unless  such  pay- 
ment be  first  authorized  by  a  vote  of  the  board  of  directors  of  such 
life  insurance  company;  provided,  that  the  limitation  as  to  time  con- 
tained herein  shall  not  be  construed  as  preventing  a  life  insurance  com- 
pany from  entering  into  contracts  with  its  agents  for  the  payment  of 
renewal  commissions.     No  such  company  shall  grant  any  pension  to 
any  officer,  director  or  trustee  thereof,  or  to  any  member  of  his  family 
after  his  death.     (R.  S.,  Art.  4739.) 

Shall  Not  Make  Disbursements  Without  Voucher. 

86.  No  domestic  life  insurance  company  shall  make  any  disburse- 
ment of  $100  or  more  unless  the  same  be  evidenced  by  a  voucher  signed 
by  or  on  behalf  of  the  person,  firm  or  corporation  receiving  the  money, 
and  correctly  describing  the  consideration  for  the  payment.     If  the  ex- 
penditure be  for  both  services  and  disbursements,  the  voucher  shall  set 
forth  the  seryice  rendered  and  statement  of  the  disbursement  made. 
If  the  expenditure  be  in  connection  with  any  matter  pending  before  any 
Legislature  or  public  body  or  before  any  department  or  officer  of  any 
State  or  government,  the  voucher  shall  correctly  describe,  in  addition, 
the  nature  of  the  matter  and  of  the  interest  of  such  company  therein. 
When  such  voucher  cannot  be  obtained,  the  expenditure  shall  be  evi- 
denced by  a  paid  check  or  an  affidavit  describing  the  character  and  ob- 
ject of  the  expenditure  and  stating  the  reasons  for  not  obtaining  such 
voucher.     (R.  S.,  Art.  4740.) 

Policies  Shall  Contain. 

87.  No  policy  of  life  insurance  shall  be  issued  or  delivered  in  this 
State,  or  be  issued  by  a  life  insurance  company  organized  under  the 
laws  of  this  State,  unless  the  same  shall  contain  provisions  substantially 
as  follows: 

1.  A  provision  that  all  premiums  shall  be  payable  in  advance  either 
at  the  home  office  of  the  company,  or  to  an  agent  of  the  company  upon 
the  delivery  of  a  receipt  signed  by  one  or  more  of  the  officers  who  are 
designated  in  the  policy. 

2.  A  provision  for  a  grace  of  at  least  one  month  for  the  payment 


INSURANCE  LAWS  OF  TEXAS.  29 

of  every  premium  after  the  first,  which  may  be  subject  to  an  interest 
charge,  during  which  month  the  insurance  shall  continue  in  force,  which 
provision  may  contain  a  stipulation  that  if  the  insured  shall  die  during 
the  period  of  grace  the  overdue  premium  will  be  deducted  in  any  settle- 
ment under  the  policy. 

Note. — The  grace  provision,  above  referred  to,  is  not  limited  to  policies  pro- 
viding for  an  annual  premium,  but  must  be  in,  and  applies  to,  policies  in  which 
the  premium  is  payable  monthly,  quarterly  or  semi-annually,  and  such  grace 
period  applies  immediately  when  the  date  for  payment  of  each  premium,  except 
the  first,  occurs.  (Opinion  of  Attorney  General,  December  17,  1912.) 

3.  A  provision  that  the  policy  or  policy  and  application  shall  con- 
stitute the  entire  contract  between  the  parties  and  shall  be  incontest- 
able not  later  than  two  years  from  its  date  except  for  non-payment  of 
premiums,  and  which  provision  may  or  may  not,  at  the  option  of  the 
company,  contain  an  exception  for  violations  of  the  conditions  of  the 
policy  relating  to  naval  and  military  services  in  time  of  war. 

Note. — If  application  is  made  part  of  contract  it  must  be  attached  to  policy. 
(Department  ruling.) 

4.  A  provision  that  all  statements  made  by  the  insured  shall,  in  the 
absence  of  fraud,  be  deemed  representations,  and  not  warranties. 

5.  A  provision  that,  if  the  age  of  the  insured  has  been  understated, 
the  amount  payable  under  the"  policy  shall  be  such  as  the  premium  paid 
would  have  purchased  at  the  correct  age. 

6.  A  provision  that  after  three  full  years'  premiums  have  been  paid 
the  company,  at  any  time  while  the  policy  is  in  force,  will  advance 
upon  proper  assignment  of  the  policy  and  upon  the  sole  security  thereof 
at  a  specified  rate  of  interest  a  sum  equal  to,  or  at  the  option  of  the 
owner  of  the  policy,  less  than  the  legal  reserve  at  the  end  of  the  cur- 
rent policy  year  on  the  policy  and  on  any  dividend  additions  thereto, 
less  than, a  sum  not  more  than  two  and  one-half  per  centum  of  the 
amount  insured  by  the  policy  and  of  any  dividend  addition  thereto; 
and  that  the  company  may  deduct  from  such  loan  value  any  existing 
indebtedness  on  the  policy  and  any  unpaid  balance  of  the  premium 
for  the  current  policy  year  and  may  collect  interest  in  advance  on  the 
loan  to  the  end  of  the  current  policy  year;  which  provision  may  further 
provide  that  such  loans  may  be  deferred  for  not  exceeding  six  months 
after  application  therefor  is  made.    It  shall  further  be  stipulated  in  the 
policy  that  failure  to  repay  any  such  advance  or  to  pay  interest  shall 
not  void  the  policy  until  the  total  indebtedness  thereon  to  the  company 
shall  equal  or  exceed  the  loan  value.     No  condition  other  than  is  herein 
provided  shall  be  exacted  as  a  prerequisite  to  any  such  advance.     This 
provision  shall  not  be  required  in  term  insurances  nor  in  pure  endow- 
ments issued  or  granted  as  original  policies,  or  in  exchange  for  lapsed 
or  surrendered  policies,  and  no  provision  herein  required  shall  compel 
any  company  to  loan  on  any  policy  an  amount  greater  than  97£  per 
centum   of  the   face   value   thereof,   including  net   dividend   additions 
thereto. 

7.  A  provision  which,  in  event  of  default  in  premium  payments, 
after  premium  shall  have  been  paid  for  three  full  years,  shall  secure 
to  the  owner  of  the  policy  a  stipulated  form  of  insurance,  the  net  value 


30  INSURANCE  LAWS  OF  TEXAS. 

of  which  shall  be  at  least  equal  to  the  reserve  at  the  date  of  default  on 
the  policy  and  on  any  dividend  additions  thereto,  specifying  the  mor- 
tality table  and  rate  of  interest  adopted  for  computing  such  reserves, 
less  a  sum  not  more  than  2J  per  cent  of  the  amount  insured  by  the 
policy  and  of  any  existing  dividend  additions  thereto,  and  less  any 
existing  indebtedness  to  the  company  on  the  policy.  Such  provision 
shall  stipulate  that  the  policy  may  be  surrendered  to  the  company  at 
its  home  office  within  one  month  from  date  of  default  for  a  specified 
cash  value,  at  least  equal  to  the  sum  which  would  otherwise  be  avail- 
able for  the  purchase  of  insurance,  as  aforesaid,  and  may  stipulate  that 
the  company  may  defer  payment  for  not  more  than  six  months  after 
the  application  therefor  is  made.  This  provision  shall  not  be  required 
in  term  insurances. 

8.  A  table  showing  in  figures  the  loan  values,  and  the  options  avail- 
able under  the  policies  each  year  upon  default  in  premium  payments 
during  the  first  twenty  years  of  the  policy,  or  the  period  during  which 
premiums  are  payable,  beginning  with  the  year  in  which  such  values  and 
options  become  available. 

9.  A  provision  that  if,  in  event  of  default  in  premium  payments, 
the  value  of  the  policy  shall  be  applied  to  the  purchase  of  other  insur- 
ances; and  if  such  insurance  shall  be  in  force  and  the  original  policy 
shall  not  have  been  surrendered  to  the  company  and  canceled,  the  policy 
may  be  reinstated  within'  three  years  from  such  default,  upon  evidence 
of  insurability  satisfactory  to  the  company  and  payments  of  arrears  of 
premiums  with  interest. 

Note. — Reinstatement  clause  not  necessary  in  policies  of  term  insurance.  (De- 
partment ruling.) 

10.  A  provision  that,  when  a  policy  shall  become  a  claim  by  the 
death  of  the  insured,  settlement  shall  be  made  upon  receipt  of  due  proof 
of  death,  and  the  right  of  the  claimant  to  the  proceeds,  or  not  later  than 
two  months  after  the  receipt  of  such  proof. 

11.  A  table  showing  the  amounts  of  installments  in  which  the  policy 
may  provide  its  proceeds  may  be  payable. 

Note. — A  monthly  income  policy,  payable  one  hundred  dollars  per  month  for 
two  hundred  and  forty  months,  need  not  contain  a  table  of  amounts  of  install- 
ments,, as  the  face  of  the  policy  shows  the  installments  in  which  it  is  payable 
and  is  the  only  table  necessary  under  this  law.  Where  the  policy  provides 
for  commutation  and  stipulates  that  the  commuted  value,  at  the  option  of  the 
insured,  may  be  paid  in  a  lump  sum,  if  such  option  is  exercised  then  the 
monthly  income  provisions  would  not  constitute  a  table  of  installments,  and 
as  the  policy  would  not  then  be  payable  in  installments,  no  installment  table 
is  necessary.  Where  the  policy  does  not  provide  that  its  benefits  may  be  pay- 
able in  installments,  no  installment  table  is  necessary.  The  statute  does  not 
require  that  all  life  insurance  policies  be  payable  in  installments  at  the  option 
of  the  insured  or  beneficiary.  Where  a  policy  is  issued  without  provision  for 
payment  of  benefits  in  installments,  then  no  table  of  installments  should  be 
inserted  in  the  policy.  (Opinion  of  Attorney  General,  June  16,  1919.) 

Any  of  the  foregoing  provisions  or  portions  thereof  not  applicable  to 
single  premium  policies  shall,  to  that  extent,  not  be  incorporated  therein. 
(E.  S.,  Art.  4741.) 


INSURANCE  LAWS  OF  TEXAS.  31 

Note. —  (1)  Subdivisions  4  and  5  of  above  section,  and  specifications  of  mor- 
tality table  and  rate  of  interest  not  necessary  in  paid-up  policies  issued  upon 
default  in  premium  payments.  (Department  ruling.) 

(2)  Issuance  of  guaranteed  dividend  policies  are  not  prohibited.  (Opinion 
of  Attorney  General,  January  5,  1911.) 

Policies  Shall  Not  Contain. 

88.  No  policy  of  life  insurance  shall  be  issued  or  delivered  in  this 
State,  or  be  issued  by  a  life  insurance  company  incorporated  under  the 
laws  of  this  State  if  it  contains  any  of  the  following  provisions : 

1.  A  provision  limiting  the  time  within  which  any  action  at  law  or 
in  equity  may  be  commenced  to  less  than  two  years  after  the  cause  of 
action  shall  accrue. 

2.  A  provision  by  which  the  policy  shall  purport  to  be  issued  or  to 
take  effect  more  than  six  months  before  the  original  application  for 
insurance  was  made,  if  thereby  the  insured  would  rate  at  any  age  younger 
fhan  his  age  at  date  when  the  application  was  made,  according  to  his 
age  at  nearest  birthday. 

3.  A  provision  for  any  mode  of  settlement  at  maturity  of  less  value 
than  the  amounts  insured  on  the  face  of  the  policy,  plus  dividend  ad- 
ditions, if  any,  less  any  indebtedness  to  the  company  on  the  policy, 
and  less  any  premium  that  may  by  the  terms  of  the  policy  be  de- 
ducted; provided,  that  any  company  may  issue  a  policy  promising  a 
benefit  less  than  the  full  benefit  in  case  of  the  death  of  the  insured  by 
his  own  hand  while  sane  or  insane,  or  by  following  stated  hazardous 
occupations.     This  provision  shall  not  apply  to  purely  accident  and 
health  policies;   none   of   the  foregoing  provisions   relating  to   policy 
forms  shall  apply  to  policies  issued  in  lieu  of  or  in  exchange  for  any 
other  policy  issued  before  July  10,  1909.     (E.  S.,  Art.  4742.) 

Note. —  ( 1 )  Some  benefit,  however  small,  must  be  provided  in  case  of  suicide. 
(Department  ruling.) 

(2)  A  rider  on   a   life  insurance   policy  providing   that   "Death   caused   by 
smallpox  is  a  risk  not  covered  by  this  policy  unless  the  insured  submits  proof 
to  the  company  of  a  successful  vaccination,"  is  in  violation  of  above  provision. 
(Opinion  of  Attorney  General,  June  12,  1912.) 

(3)  The  life  insurance  companies  cannot  agree  upon  a  uniform  policy  at  a 
uniform  rate,  to  be  sold  for  the  benefit  of  the   students  loan  fund  or  the  as- 
sured, as  this  controverts  the  anti-trust  laws  of  this  State.     The  students  loan 
fund  could  not  retain  the  proceeds  of  a  policy  in  its  favor,  because  it  would 
have  no  insurable  interest  in  the  life  of  the  assured.      (Opinion  of  Attorney 
General,  December  11,  1914.) 

Policies  of  Foreign  Companies  May  Contain. 

89.  The  policies  of  a  life  insurance  company  not  organized  under 
the  laws  of  this  State  may  contain  any  provision  which  the  law  of  the 
State,  Territory,  district  or  country  under  which  the  company  is  organ- 
ized prescribes  shall  be  in  such  policies  when  issued  in  this  State,  and 
the  policies  of  a  life  insurance  company  organized  under  the  laws  of 
this  State  may,  when  issued  or  delivered  in  any  other  State,  Terri- 
tory, district  or  country,  contain  any  provision  required  by  the  laws 
of  the  State,  Territory,  district  or  country  in  which  the  same  are  is- 
sued, anything  in  this  chapter  to  the  contrary  notwithstanding.     (R.  S., 
Art.  4743.) 


32  INSURANCE  LAWS  OF  TEXAS. 

Interest  of  Beneficiary  Forfeited  if  Interested  in  Causing  Ueath  of  Insured. 

90.  That  the  interest  of  a  beneficiary  in  a  life  insurance  policy  or 
contract  heretofore  or  hereafter  issued  shall  be  forfeited  when  the  bene- 
ficiary is  the  principal  or  an  accomplice  in  wilfully  bringing  about  the 
death  of  the  insured.     However,,  providing  when  such  is  the  case,  the 
nearest  relative  of  insured  shall  receive  said  insurance.     (Sec.  1,  Chap. 
16,  Acts  Thirty-sixth  Legislature.) 

Taxes,  Shall  Pay. 

91.  Insurance  companies  incorporated  under  the  laws  of  this  State 
shall  hereafter  be  required  to  render  for  State,  county  and  municipal 
taxation  all  of  their  real  estate  as  other  real  estate  is  rendered,  and  all 
of  the  personal  property  of  such  insurance  companies  shall  be  valued 
as  other  property  is  valued  for  assessment  in  this  State  in  the  follow- 
ing manner:     From  the  total  valuation  of  its  assets  shall  be  deducted 
the  reserve,  being  the  amount  of  the  debts  of  insurance  companies  By 
reason  of  their  outstanding  policies  in  gross,  and  from  the  remainder 
shall  be  deducted  the  assessed  value  of  all  real  estate  owned  by  the  com- 
pany and  the  remainder  shall  be  the  assessed  taxable  value  of  its  per- 
sonal property.     Home  insurance  companies  shall  not  be  required  to 
pay  any  occupation  or  gross  receipt  tax.     (E.  S.,  Art.  4764.) 

Note. — A  life  insurance  company  in  rendering  its  personal  assets  for  tax- 
ation, in  making  the  deduction  on  account  of  its  real  estate,  is  permitted  to 
deduct  the  "assessed"  valuation  of  such  real  estate,  and  not  an  appraised  value, 
which  might  be  different  in  amount  from  the  assessed  valuation.  (Opinion  of 
Attorney  General,  June  15,  1912.) 

Venue  of  Suits  on  Policies  (Home  and  Foreign  Companies). 

92.  Suits  on  policies  may  be  instituted  and  prosecuted  against  any 
life  insurance  company,  or  accident  insurance  company,  or  life  and  acci- 
dent, or  health  and  accident,  or  life,  health  and  accident  insurance  com- 
pany, in  the  county  where  .the  home  office  of  such  company  is  located, 
or  in  the  county  where  loss  has  occurred,  or  where  the  policyholder  or 
beneficiary  instituting  such  suit  resides.     (E.  S.,  Art.  4744.) 

Service  of  Process. 

93.  Process  in  any  civil  suit  against  any  domestic  life  insurance 
company,  or  accident  insurance  company,  or  life  and  accident,  health 
and  accident,  or  life,  health  and  accident  insurance  company,  may  be 
served  only  on  the  president,  or  any  active  vice-president  or  secretary 
or  general  counsel  residing  at  the  city  of  the  home  office  of  the  com- 
pany, or  by  leaving  a  copy  of  same  at  the  home  office  of  such  company 
during  business  hours.     (E.  S.,  Art.  4745.) 

Losses  Shall  Be  Paid  When  (Home  and  Foreign  Companies). 

94.  In  all  cases  where  a  loss  occurs  and  the  life  insurance  company, 
or  accident  insurance  company,  or  life  and  accident,  health  and  acci- 
dent, or  life,  health  and  accident  insurance   company  liable  therefor 
shall  fail  to  pay  the  same  within  thirty  days,  after  demand  therefor, 
such  company  shall  be  liable  to  pay  the  holder  of  such  policy,  in  addi- 
tion to  the  amount  of  the  loss,  12  per  cent  damages  on  the  amount 


INSURANCE  LAWS  OF  TEXAS.  33 

of  such  loss,  together  with  reasonable  attorney  fees  for  the  prosecution 
and  collection  of  such  loss.     (E.  S.,  Art.  4746.) 

Certificate  Shall  Be  Declared  Null  and  Void  Upon  Failure  to  Pay  Losses 
(Home  and  Foreign  Companies). 

95.  Should  any  life  insurance  company,  accident  insurance  com- 
pany, life  and  accident,  health  and  accident,  or  life,  health  and  accident 
insurance  company  fail  to  pay  off  and  satisfy  any  execution  that  may 
lawfully  issue  on  any  final  judgment  against  said  company  within  thirty 
days  after  the  officer  holding  such  execution  has  demanded  payment 
thereof  from  any  officer  or  attorney  of  record  of  such  company,  in  this 
State,  or  out  of  it,  such  officer  shall  immediately  certify  such  demand 
and  failure  to  the  Commissioner  of  Insurance  and  Banking,  and  there- 
upon the  Commissioner  shall  forthwith  declare  null  and  void  the  cer- 
tificate of  authority  of  such  company,  and  such  company  shall  be  pro- 
hibited from  transacting  any  business  in  this  State  until  such  execution 
shall  be  fully  satisfied  and  discharged,  and  until  such  Commissioner 
shall  renew  his  certificate  of  authority  to  such  company.     (K.  S.,  Art. 
4747.) 

Companies   Cannot   Transact  Business   of   Both   Fire,   Marine,   Etc.,   and 
Life  and  Health  (Home  and  Foreign  Companies). 

96.  It  shall  be  unlawful  for  any  life  insurance  company,  accident 
insurance  company,  life  and  accident,  health  and  accident,  and  life, 
health  and  accident  insurance  company  to  take  any  kind  of  risks,  or 
issue  any  policies  of  insurance,  except  those  of  life,  accident  or  health, 
nor  shall  the  business  of  life,  accident  or  health  insurance  in  this  State 
be  in  anywise  conducted  or  transacted  by  any  company  which  in  this 
or  any  other  State  or  country  is  engaged  or  concerned  in  the  business 
of  marine,  fire  or  inland  insurance.     (E.  S.,  Art.  4748.) 

May  Deposit  With  State  Treasurer— Commissioner  Shall  Approve  Deposit — 
Situs  of  Property  for  Taxation. 

97.  Any  life  insurance  company,  accident  insurance  company,  life 
and  accident,  health  and  accident,  or  life,  health  and  accident  insurance 
company,  organized  under  the  laws  of  this  State,  may  at  its  option 
deposit  with  the  Treasurer  of  this  State  securities  equal  to  amount  of 
its  capital  stock,  and  may  at  its  option  withdraw  the  same,  or  any 
part  thereof,  first  having  deposited  in  the  treasury  in  lieu  thereof  other 
securities  equal  in  value  to  those  withdrawn.    Any  such  securities,  before 
being  so  originally  deposited  or  substituted,  shall  be  approved  by  the 
Commissioner  of  Insurance  and  Banking,  and  when  any  such  deposit 
is  made  the  Treasurer  shall  execute  to  the  company  making  the  deposit  a 
receipt  therefor,  giving  such  description  to  such  securities  as  will  identify 
the  same,  and  such  company  shall  have  the  right  to  advertise  such  fact 
or  print  a  copy  of  the  Treasurer's  receipt  on  the  policies  it  may  issue, 
and  the  proper  officers  or  agents  of  each  insurance  company  making 
such  deposit  shall  be  permitted  at  all  reasonable  times  to  examine  such 
securities  and  to  detach  coupons  therefrom  and  to  collect  interest  thereon 
under  such  reasonable  rules  and  regulations  as  may  be  prescribed  by  the 
Treasurer  and  the  Commissioner  of  Insurance  and   Banking  of  this 
State.     The  deposit  herein  provided  for,  when  made  by  any  company. 


34  INSURANCE  LAWS  OF  TEXAS. 

shall  thereafter  be  maintained  as  long  as  said  company  shall  have  out- 
standing any  liability  to  its  policyholders.  For  the  purpose  of  State, 
county  and  municipal  taxation  the  situs  of  all  personal  property  be- 
longing to  such  companies  shall  be  at  the  home  office  of  such  company. 
(E.  S.,  Art.  4749.) 

Note. —  (1)  A  life  insurance  company  in  making  the  deposit  above  author- 
ized, may  execute  a  conveyance  in  trust  of  its  home  office  building  to  the  State 
Treasurer,  and  after  approval  by  the  Commissioner  of  Insurance  and  Banking, 
may  deposit  such  conveyance  in  trust  with  the  State  Treasurer.  The  convey- 
ance should  be  recorded  in  the  county  where  the  building  is  situated,  and  should 
be  properly  authorized  by  resolution  of  the  company's  board  of  directors,  or  by 
a  duly  appointed  and  authorized  finance  committee  acting  for  the  company. 
(Opinion  of  Attorney  General,  January  6,  1912.) 

(2)  A   life   insurance   company   may   deposit   and   the    Commissioner    of   In- 
surance and   Banking  may  approve  for  deposit  securities  worth  more  than  the 
capital   stock   of  the  company,   and   such   securities   may  be   appraised   at  their 
market  value  at  the  time  of  the  deposit,  and  not  merely  to  the  amount  of  the 
capital  stock.     As  a  part  of  such  deposit,  the  company  may  convey  in  trust  to 
the  State   Treasurer   its  home  office  lot  and  building,   which  may  be   appraised 
and   approved   by   the   Commissioner   of   Insurance   and    Banking   at   its   market 
value  at  the  time  of  the  deposit.     Such  approval  as  to  valuation  may  be  changed 
at  any  time  by  the  Commissioner,   and  the   amount  of  the   deposit  thereby  in- 
creased or  reduced  whenever  any  change  in  the  market  value  of   the  property 
occurs.      (Opinion  of  Attorney  General,  January  30,   1912.) 

(3)  In   depositing   registered  bonds,   it   is   sufficient   for   the   insurance   com- 
pany  to   accompany  the   same   by   a   declaration   of   trust.     It   is   not   necessary 
that  the  title  to  such  registered  bonds  be  transferred  to  or  vested  in  the  State 
Treasurer,  who  is  a  mere  holder  or  inactive  trustee.      (Opinion  of  Attorney  Gen- 
eral, May  4,  1918.) 

May  Deposit — Commissioner  May  Appraise  Deposit. 

98.  Any  life  insurance  company  now  incorporated,  or  which  may 
hereafter  be  incorporated  under  the  laws  of  this  State,  may  deposit  with 
the  Commissioner  of  Insurance  and  Banking  of  the  State  of  Texas,  for 
the  common  benefit  of  all  the  holders  of  its  policies  and  annuity  bonds, 
securities  of  the  kinds  in  which  by  the  laws  of  this  State  it  is  permitted 
to  invest  or  loan  its  funds,  equal  to  the  legal  reserve  on  all  its  outstand- 
ing policies  in  force,  which  securities  shall  be  held  by  said  Commissioner 
in  trust  for  the  purpose  and  objects  herein  specified.  Any  such  company 
may  deposit  lawful  money  of  the  United  States  in  lieu  of  the  securities 
above  referred  to,  or  any  portion  thereof  and  may  also,  for  the  purposes 
of  such  deposit,  convey  to  said  Commissioner  in  trust  the  real  estate  in 
which  any  portion  of  its  said  reserve  may  be  lawfully  invested,  and  in 
such  case  said  Commissioner  shall  hold  the  title  thereto  in  trust  until 
other  securities  in  lieu  thereof  shall  be  deposited  with  him,  whereupon 
he  shall  reconvey  the  same  to  such  company;  said  Commissioner  may 
cause  any  such  securities  or  real  estate  to  be  appraised  and  valued  prior 
to  their  being  deposited  with  or  conveyed  to  him  in  trust  as  aforesaid; 
the  reasonable  expense  of  such  appraisement  or  valuation  to  be  paid  by 
the  company.  (R.  S.,  Art.  4750.) 

Note. —  (1)  A  company  having  invested  in  a  building  site,  upon  wh'ch  there 
is  an  encumbrance,  for  office  purposes,  may  convey  its  equity  in  such  site  at  the 
properly  appraised  value,  to  the  Commissioner  in  trust  as  a  part  of  its  reserve 
deposit,  and  may  be  credited  with  the  amount  of  such  appraised  value.  When 
portions  of  the  encumbrance  are  paid  off,  the  company  will  be  entitled  to 


INSURANCE  LAWS  OF  TEXAS.  35 

credits  on  its  reserve  deposits  for  the  amounts  of  the  encumbrance  so  dis- 
charged as  they  are  paid  off  or  discharged.  As  the  building  on  the  site  pro- 
gresses, the  amount  expended  for  construction,  from  time  to  time,  may  be  ap- 
praised, and  the  company  will  be  entitled  to  credit  on  its  reserve  deposit  i<>r 
the  amount  so  expended  in  construction,  or  such  proportion  of  said  amount  as 
the  Commissioner  shall  determine  to  be  the  increase  in  value  of  the  property 
as  a  result  of  such  expenditure.  (Opinion  of  Attorney  General,  August  10, 
1910.) 

(2)  A  foreign  life  insurance  company  may  lawfully  reinsure  the  business  of 
a  Texas   life  insurance  company  which   deposits  securities  under  above   section 
of  the  law.    (Opinion  of  Attorney  General,  January  16,   1915.) 

(3)  It   is   not  within  the   province  of  the   Commissioner   of  insurance   and 
Banking  to  give  his  consent  for  a  company  to  discontinue  the  practice  of  regis- 
tering  policies   and   depositing   securities   against   its   reserve,   and   there   is   no 
provision   in   the   law   authorizing   such   discontinuance.      (Opinion   of   Attorney 
General,  July  6,  1921.) 

Policies  Shall  Have  Upon  Face — Commissioner  Shall  Sign  Policy. 

99.  After  making  the  deposit  mentioned  above,  no  company  shall 
thereafter  issue  a  policy  of  insurance  or  endowment  or  annuity  bond, 
except  policies  of  industrial  insurance,  unless  it  shall  have  upon  its 
face  a  certificate  substantially  in  the  following  words :     "This  policy 
is  registered  and  approved  securities  equal  in  value  to  the  legal  reserve 
hereon  are  held  in  trust  by  the  Commissioner  of  Insurance  and  Banking 
of  the  State  of  Texas."    Which  certificate  shall  be  signed  by  such  Com- 
missioner and  sealed  with  the  seal  of  his  office.     (R.  §.,  Art.  4751.) 

Policies  Shall  Have  Printed  Thereon. 

100.  All  policies  and  bonds  of  each  kind  and  class  issued  and  the 
forms  thereof  filed  in  the  office  of  said  Commissioner  shall  have  printed 
thereon  some  appropriate  designating  letter  or  figure,  combination  of 
letters  or  figures  or  terms  identifying  the  particular  form  of  contract, 
together  with  the  year  of  adoption  of  such  form,  and  whenever  any 
change  or  modification  is  made  in  the  form  of  contracts,  policy  or  bond, 
the  designating  letters,  figures  or  terms  and  year  of  adoption  thereon 
shall  be  correspondingly  changed.     (R.  S.,  Art.  4751.) 

Commissioner  Shall  Keep  Record  of  Policies — Commissioner  Shall  Value 
Policies. 

101.  The  Commissioner  of  Insurance  and  Banking  shall  prepare  and 
keep  such  registers  thereof  as  will  enable  him  to  compute  their  value 
at  any  time.     Upon  written  proof,  attested  by  the  president  or  vice- 
president  and  secretary  of  the  company  which  shall  have  issued  such 
policies  or  annuity  bonds,  that  any  of  them  have  been  commuted  or 
terminated,  the  Commissioner  shall  commute  or  cancel  them  upon  his 
register,  and  until  such  proof  is  furnished  all  registered  contracts  shall 
be  considered  in  force  for  the  purposes  of  this  chapter.    The  net  value  of 
every  policy  or  annuity  bond,  according  to  the  standard  prescribed  by  the 
laws  of  this  State  for  the  valuation  of  policies  of  life  insurance  com- 
panies, when  the  first  premium  shall  have  been  paid  thereon,  less  the 
amount  of  such  liens  as  the  company  may  have  against  it  (not  exceed- 
ing such  value),  shall  be  entered  opposite  the  record  of  said  policy  or 
annuity  bond  in  the  register  aforesaid  at  the  time  such  record  is  made. 
On  the  first  day  of  January  of  each  year,  or  within  sixty  days  thereafter, 


36  INSURANCE  LAWS  or  TEXAS. 

the  Commissioner  shall  cause  the  policies  and  annuity  bonds  of  each 
company  accepting  the  terms  of  this  chapter  to  be  carefully  valued,  and 
the  actual  value  thereof  at  the  time  fixed  for  such  valuation,  less  such 
liens  as  the  company  may  have  against  it,  not  exceeding  such  value,  shall 
be  entered  upon  the  register  opposite  the  record  of  such  policy  or  bond, 
and  the  Commissioner  shall  furnish  a  certificate  of  the  aggregate  of  such 
value  to  the  company.  (E.  S.,  Art.  4751.) 

Commissioner  Shall  Cancel  Mutilated  Policies. 

102.  It  stall  be -the  duty  of  the  Commissioner  to  cancel  mutilated 
or  surrendered  policies  and  annuity  bonds  issued  by  any  such  company 
and  register  other  like  policies  or  bonds  issued  in  lieu  thereof.     (E.  S., 
Art.  4751.) 

Shall  Make  Additional  Deposits. 

103.  Each  company  which  shall  have  made  the  deposit  herein  pro- 
vided for  shall  make  additional  deposits  from  time  to  time,  in  amounts 
not  less  than  five  thousand  dollars,  and  of  such  securities  as  are  per- 
mitted by  this  chapter  to  be  deposited,  so  that  the  market  value  of  the 
securities  deposited  shall  always  be  equal  to  the  net  value  of  the  policies 
and  annuity  bonds,  issued  by  said  company,  less  such  liens  as  the  com- 
pany may  have  against  them,  not  exceeding  such  net  value.     So  long 
as  any  company  shall  maintain  its  deposits  as  herein  prescribed  at  an 
amount  equal  to  or  in  excess  of  the  net  value  of  its  policies  and  annuity 
bonds  as  aforesaid,  it  shall  be  the  duty  of  said  Commissioner  to  sign 
and  affix  his  seal  to  the  certificate  before  mentioned  on  every  policy 
and  annuity  bond  presented  to  him  for  that  purpose  by  any  company 
so  depositing.     (E.  S.,  Art.  4751.) 

Commissioner  Shall  Keep  Record  of  Securities. 

104.  The  Commissioner  shall  keep  a  careful  record  of  the  securities 
deposited  by  each  company,  showing  by  item  the  amount  and  market 
value  thereof.     If  at  any  time  it  shall  appear  therefrom  that  the  value 
of  the  securities  held  on  deposit  is  less  than  the  actual  value  of  the 
policies  and  annuity  bonds  issued  by  such  company  and  then  in  force, 
it  shall  be  unlawful  for  the  Commissioner  to  execute  the  certificate 
on  any  additional  policies  or  annuity  bonds  of  such  company  until  it 
shall  have  made  good  the  deficit.     (E.  S.,  Art.  4751.) 

Deposits  May  Be  Increased. 

105.  Any  company  depositing  under  the  provisions  of  this  act  may 
increase  its  deposits  at  any  time  by  making  additional  deposits  of  not 
less  than  five  thousand  dollars  of  such  securities  as  are  authorized  by 
this  chapter.    Any  such  company  whose  deposits  exceed  the  net  value  of 
all  policies  and  annuity  bonds  it  has  in  force,  less  such  liens  (not  ex- 
ceeding such  net  value),  as  the  company  may  hold  against  them,  may 
withdraw  such  excess,  and  it  may  withdraw  any  of  such  securities  at 
any  time  by  depositing  others  of  equal  value   and  of  the   character 
authorized  by  this  chapter  in  their  stead,  and  it  may  collect  the  interest, 
coupons,  rents  and  other  income  on  the  securities  deposited  as  the  same 
accrue.     (E.  S.,  Art.  4751.) 


INSURANCE  LAWS  OF  TEXAS.  37 

Commissioner  Shall  Keep  Securities. 

106.  The  securities  deposited  under  this  chapter  by  each  company 
shall  be  placed  and  kept  by  the  Commissioner  of  Insurance  and  Banking 
of  the  State  in  some  secure,  safe  deposit  fireproof  box  or  vault  in  the 
city  or  town  in  or  near  which  the  home  office  of  the  company  is  located, 
and  the  officers  of  the  company  shall  have  access  to  such  securities  for 
the  purpose  of  detaching  interest  coupons  and  crediting  payment  and 
exchanging  securities  as  above  provided,  under  such  reasonable  rules 
and   regulations   as    the    Commissioner   may    establish.     (R.    S.,    Art. 
4751.) 

Fees  for  Making  Deposit. 

107.  Every  company  making  deposit  under  the  provisions  of  this 
chapter  shall  pay  to  the  Commissioner  of  Insurance  and  Banking  for 
each  certificate  placed  on  registered  policies  or  annuity  bonds  issued  by 
the  company  after  the  original  or  first  deposit  is  made  hereunder,  a  fee 
of  25  cents,  and  the  fee  so  received  shall  be  disposed  of  by  said  Commis- 
sioner as  follows: 

(1)  The  payment  of  the  annual  rent  or  hire  of  the  safety  deposit 
fireproof  box  above  provided. 

(2)  Payment  for  the  services  of  a  competent  and  reliable  representa- 
tive of  said  Commissioner,  to  be  appointed  by  him,  who  shall  have  direct 
charge  of  the  securities  and  safety  box  containing  same,  and  through 
whom  and  under  whose  supervision  the  insurance  company  may  have 
access  to  its  securities  for  the  purpose  above  provided.     The  sum  paid 
such  representative  shall  not  exceed  sixty  dollars  per  annum  for  each 
company. 

(3)  The  balance  of  such  fees  shall  be  paid  to  or  deposited  with 
the  State  Treasurer  to  the  credit  of  the  general  fund.     (R.  S.,  Art. 
4752.) 

Note. — The  fees  collected  for  certificates  on  registered  policies  are  a  special 
fund  in  the  hands  of  the  Commissioner  to  be  used  by  him  primarily  to  defray 
expenses  incurred  in  the  keeping  of  the  securities.  Any  excess  over  the  amount 
of  the  necessary  expense  becomes  the  property  of  the  State  and  must  be  deposited 
in  the  Treasury  by  the  Commissioner.  The  Commissioner  should  retain  these 
fees  and  pay  therefrom  the  expenses  authorized  by  the  statute,  and  at  intervals 
when  a  surplus  is  ascertained  to  be  on  hand,  he  should  deposit  same  in  the 
Treasury.  These  funds  should  not  be  deposited  on  the  day  they  are  received. 
The  surplus  only,  if  any,  belongs  to  the  State  and  should  be  deposited  in  the 
Treasury.  (Opinion  of  Attorney  General,  April  8,  1919.) 

Securities  May  Consist  of  Capital  Stock. 

108.  Any  life  insurance  company  organized  under  the  laws  of  this 
State  and  making  the  deposit  provided  for  by  this  chapter,  may  include 
as  a  part  thereof  securities  representing  its  capital  stock,  and  any  de- 
posits of  its  securities  heretofore  or  hereafter  made  in  compliance  with 
the  laws  of  this  State  representing  its  capital  stock,  and  shall  only  be 
required  to  deposit  in  addition  thereto  the  remainder  of  its  total  reserve 
on  outstanding  policies  and  annuity  bonds  after  deducting  therefrom  the 
amount  of  its  capital  stock  securities  so  deposited.     (R.  S.,  Art.  4753.) 


33  INSURANCE  LAWS  OF  TEXAS. 

Deposits  Must  Be  Constantly  Maintained. 

109.  Deposits  of  securities  made  hereunder  to  the  value  of  the  re- 
serve on  all  outstanding  policies  and  annuity  bonds  shall  be  added  to  and 
maintained  from  time  to  time  as  the  reserve  values  increase,  by  the 
company  issuing  such  contracts,  or  by  any  company  which  may  reinsure 
or  assume  them,  and  such  securities  shall  be  held  by  the  Commissioner 
of  Insurance  and  Banking  and  his  successors  in  office  in  trust  for  the 
benefit  of  such  policies  and  annuity  bonds  so  long  as  the  same  shall 
remain  in  force.     No  company  making  the  deposit  provided  for  herein 
shall  reinsure  its  outstanding  business,  or  the  whole  of  any  one  or  more 
of  its  risks  except  in  or  with  a  company  or  companies  incorporated  and 
organized  under  the  laws  of  this  State,  or  a  company  having  permission 
to  do  business  in  this  State.     (E.  S.,  Art.  4743.) 

Note. —  (1)  A  foreign  life  insurance  company,  while  doing  business  in  Texas 
under  certificate  of  authority,  had  securities  on  deposit  with  the  State  Treas- 
urer and  with  the  Commissioner  of  Insurance  and  Banking  as  required  by  law. 
It  merged  with  another  foreign  company  under  a  new  charter  and  a  new  name. 
The  merged  or  consolidated  company  has  no  authority  to  do  business  in  Texas 
:and  does  not  seek  to  do  business  in  this  State.  Under  these  circumstances,  the 
^consolidated  company  may  substitute  its  securities  for  those  on  deposit— those 
on  deposit  being  withdrawn  upon  the  deposit  of  new  securities  of  equal  value, 
when  approved  for  deposit.  (Opinion  of  Attorney  General,  March  10,  1912.) 

(2)  A  foreign  life  insurance  company,  which  has  reinsured  policies  of  a 
Texas  company  which  is  depositing  its  reserve  with  the  Commissioner,  and 
which  foreign  company  afterwards  merged  with  another  foreign  company,  the 
consolidated  company  not  being  authorized  to  do  business  in  Texas,  may  with- 
draw securities  in  excess  of  the  reserve  on  the  reinsured  policies.  The  reserve 
which  must  be  covered  by  the  deposit  must  be  calculated  down  to  the  date  of 
withdrawal  in  determining  the  excess  amount  which  may  be  withdrawn.  (Opin- 
ion of  Attorney  General,  August  1,  1914.) 

Commissioner  Shall  Compute  and  Charge  Extra  Reserve  (Home  and  For- 
eign Companies). 

110.  If  any  life  insurance  company  doing  business  under  the  law 
of  this  State  has  written  or  assumed  risks  that  are  substandard  or  extra 
hazardous,  and  has  charged  therefor  more  than  its  published  rates  of 
premium,  the  Commissioner  of  Insurance  and  Banking  shall  in  valuing 
such  policies,  compute  and  charge  such  extra  reserve  thereon  as  is  war- 
ranted by  reason  of  the  extra  hazard  assumed  and  the  extra  premium 
charged.     (R.  S.,  Art.  4754.) 

Companies  Shall  Not  Pay  Commissions  to  Officers. 

111.  No  life  insurance  company  transacting  business  in  this  State 
shall  pay  or  contract  to  pay,  directly  or   indirectly,  to  its  president, 
vice-president,  secretary,  treasurer,  actuary,  medical  director  or  other 
physician  charged  with  the  duty  of  examining  risks  or  applications  for 
insurance  or  to  any  officer  of  the  company  other  than  an  agent  or  solic- 
itor, any  commission  or  other  compensation  contingent  upon  the  writing 

%or  procuring  of  any  policy  of  insurance  in  such  company  or  procuring 
an  application  therefor  by  any  person  whomsoever,  or  contingent  upon 
the  payment  of  any  renewal  premium,  or  upon  the  assumption  of  any 
life  insurance  risk  by  such  company,  and  should  any  company  violate 
the  provisions  of  this  section,  it  shall  be  the  duty  of  the  Commissioner 


INSURANCE  LAWS  OF  TEXAS.  3!) 

of  Insurance  and  Banking  to  revoke  its  certificate  of  authority  to  trans- 
act business  in  this  State.     (R.  S.,  Art.  4755.) 

Note. — There  is  no  lawful  reason  why  a  number  of  agents  of  a  life  insurance 
company  may  not  associate  themselves  into  a  limited  or  general  partnership. 
The  officers  and  directors  of  a  company,  however,  could  not  lawfully  enter  such 
a  partnership  or  relation  of  agency  to  their  own  company  in  conflict  with 
Article  4755  of  the  Revised  Statutes  of  Texas,  which  prohibit  the  officers  and 
directors  of  a  company  from  being  paid  any  commission  for  their  services  as 
agents.  (Opinion  of  Attorney  General,  July  5,  1921.) 

Provisions  Shall  Govern  Co-operative  Companies. 

112.  The  provisions  of  Article  4750  to  Article  4755,   Sections   98 
to  111,  this  digest,  inclusive,  shall  likewise  apply  to  and  govern   co- 
operative life   insurance   companies  organized  under  the   laws  of  this 
State.     (R.  S.,  Art.  4756.) 

Funds  Shall  Be  Deposited  in  the  Name  of  the  Company. 

113.  Any  director,  member  of  a  committee  or  officer  or  any  clerk 
of  a  home  company  who  is  charged  with  the  duty  of  .handling  or  in- 
vesting its  funds  shall  not  deposit  or  invest  such  funds  except  in  the 
corporate  name  of  such  company;  shall  not  borrow  the  funds  of  such 
company;  shall  not  be  interested  in  any  way  in  any  loan,  pledge,  secu- 
rity, or  property  of  such  company,  except  as  stockholder;  shall  not  take 
or  receive  to  his  own  use  any  fee,  brokerage,  commission,  gift  or  other 
consideration  for  or  on  account  of  a  loan  made  by  or  on  behalf  of  such . 
company.     (R.  S.,  Art.  4757.) 

Note. — See  Section  82. 

Capital  Stock,  Impairment  of — Duties  of  Commissioner  When  Impaired. 

114.  Any  such  insurance  company  transacting  business  within  this 
State  whose  capital  stock  shall  become  impaired  to  the  extent  of  33J 
per  cent  thereof,  computing  its  liabilities  according  to  the  terms  of  this 
chapter  shall  make  good  such  impairment  within  sixty  days  by  reduc- 
tion of  its  capital  stock   (provided  such  capital  stock  shall  in  no  case 
be  less  than  $100,000)   or  otherwise,  and  failure  to  make  good  such 
impairment  within  said  time  shall  forfeit  its  rights  to  write  new  business 
in  this  State  until  said  impairment  shall  have  been  made  good ;  and 
provided  that  the  Commissioner  of  Insurance  and  Banking  may  apply 
to  any  court  of  competent  jurisdiction  for  the  appointment  of  a  receiver 
to  wind  up  the  affairs  of  such  company  when  its  capital  stock  shall 
become  impaired  to  the  extent  of  50  per  cent  thereof,  computing  its 
policy  liabilities  according  to  the  American  Experience  Table  of  Mor- 
tality and  4J  per  cent  interest;  and,  provided  further,  that  no  company 
shall  write  new  business  in  Texas  when  its  net  surplus  to  policyholders 
is  less  than  $100,000.     (R.  S.,  Art.  4758.) 

Note. — See  reference  to  opinion  of  Attorney  General  under  Section  230. 

Form  of  Policies  Shall  Be  Filed  With  Commissioner  (Home  and  Foreign 
Companies). 

115.  Life  insurance  companies  shall  within  five  days  after  the  issu- 
ance of  and  the  placing  upon  the  market  any  form  of  policies  of  life 


40  INSURANCE  LAWS  OF  TEXAS. 

insurance,  file  a  copy  of  such  form  of  policy  with  the  Department  of 
Insurance  and  Banking.     (E.  S.,  Art.  4759.) 

Note. —  (1)  The  laws  of  Texas  do  not  authorize  the  Commissioner  to  approve 
or  disapprove  the  forms  of  life  insurance  policies.  (Opinion  of  Attorney  Gen- 
eral, May  20,  1915.) 

(2)  There  is  no  law  which  authorizes  the  Commissioner  to  either  approve 
or  disapprove  a  life  insurance  policy.  He  is  merely  required  to  file  such  policy. 
However,  he  should  not  file  a  policy  which  in  any  way  violates  any  statutory 
provision.  (Opinion  of  Attorney  General,  June  16,  1919.) 

Commissioner   Shall   Approve    Form   of   Industrial,    Accident    or   Health 
Policy  (Home  and  Foreign  Companies). 

116.  No  insurance  company  transacting  business  in  this  State  shall 
hereafter  be  permitted  to  issue  or  sell  any  policy  of  industrial  life  in- 
surance, or  any  policy  of  accident  or  health  insurance,  until  the  form 
thereof  has  been  submitted  to  the  Commissioner  of  Insurance  and  Bank- 
ing. If  the  Commissioner  of  Insurance  and  Banking  shall  approve  the 
form  of  such  policy  as  complying  with  the  requirements  of  the  laws  of 
this  State,  the  same  may  thereafter  be  issued  and  sold.  If  he  shall  dis- 
approve the  same,  any  such  company  may  institute  a  proceeding  in  any 
court  of  competent  jurisdiction  to  review  his  action  thereon.  (E.  S., 
Art.  4760.) 

Note. —  (1)  Policies  of  industrial  insurance  are  not  subject  to  provisions  of 
Sections  86  and  87.  (Department  ruling.) 

(2)  An    accident    policy    was    properly    disapproved    by    the    Commissioner 
because   it   contained   the    following   provision    in   the    application:      "I   hereby 
apply  for  a  policy     *     *     *     to  be  based  on  the  following   statements,   all   of 
which  I  warrant  to  be  complete  and  true     *     *     *,     and  I   agree  that  if  any 
of  said  statements  shall  be  untrue     *     *     *     said  policy  of  insurance  shall  be 
null  and  void";   on  the  ground  that  the  law  provides  that  a  policy  shall  be 
null  and  void  in  case  of  misrepresentation  only  when  the  misrepresentation  is 
material,  while  the  agreement  quoted  attempts  to  make  the  policy  void  whether 
the  untrue  statements  be  material  or  not. 

A  provision  in  an  accident  policy  requiring  written  notice  of  accident  to  be 
given  at  the  home  office  of  the  company  within  fifteen  days  from  date  of  in- 
jury "(subject,  however,  to  any  statutory  provision  respecting  such  notice)," 
was  also  properly  disapproved  by  the  Commissioner  because  the  policy  should 
not  require  such  notice  to  be  given  within  less  than  ninety  days  as  provided 
by  Texas  statute,  notwithstanding  the  parenthetical  expression.  (Opinion  of 
Attorney  General,  December  2,  1910.) 

(3)  An  accident  policy  which  requires  notice  of  the  accident  or  injury  to 
be  delivered  to  an  agent  "authorized  to  receive  the  same,"  is  more  restrictive 
than  the  statute  requires  and  should  not  be  approved.     A  provision  in  such  a 
policy  requiring  notice  of  accident  to  be  given  within  five  days  is  contrary  to 
the  statute  and  should  not  be  approved.      (Opinion  of  Attorney  General,  April 
17,  1914.) 

(4)  A  workmen's  compensation  policy  is  an  accident  policy,  and  the  form 
must  be  filed  with,  and  approved  by,  the  Commissioner  before  it  can  be  law- 
fully  issued   in  Texas.     Any  company   failing   to   obtain   such   approval   before 
issuing  in  Texas  should  have  its  license  revoked.      (Opinion  of  Attorney  Gen- 
eral, June  22,  1914.) 

(5)  The  Commissioner  is   not  required  to   approve   or   disapprove   a   policy 
issued   by   a   reciprocal   association.      (Opinion   of   Attorney   General.    June    12, 
1919.) 


INSURANCE  LAWS  OF  TEXAS.  41 

Certificate  of  Authority,  Must  Have. 

117.  No  foreign  or  domestic  insurance  company  shall  transact  any 
insurance  business  in  this  State,  other  than  the  lending  of  money,  unless 
it  shall  first  procure  from  the  Commissioner  of  Insurance  and  Banking 
a  certificate  of  authority  stating  that  the  requirements  of  the  laws  of  this 
State  have  been  fully  complied  with  by  it,  and  authorizing  it  to  do  busi- 
ness in  this  State.    Such  certificate  of  authority  shall  expire  on  the  last 
day  of  February  in  each  year,  and  shall  be  renewed  annually  so  long  as 
the  company  shall  continue  to  comply  with  the  laws  of  the  State,  such 
renewals  to  be  granted  upon  the  same  terms  and  consideration  as  the 
original  certificate.     (E.  S.,  Art.  4761.) 

Companies  May  Be  Incorporated  to  Transact  Monthly  and  Weekly  Insur- 
ance Premium  Plan,  With  Capital  of  $25,000. 

118.  Companies  may  be  incorporated  in  the  manner  prescribed  by 
this  chapter  for  the  incorporation  of  life,  accident  and  health  insurance 
companies  generally,  which  shall  have  power  only  to  transact  business 
within  the  State  of  Texas,  and  to  write  insurance  only  on  the  weekly 
or  monthly  premiums  plan,  and  to  issue  no  policy  promising  to  pay 
more  than  one  thousand  dollars  in  the  event  of  the  death  of  the  injured 
from  natural  causes,  nor  more  than  two  thousand  dollars  in  the  event  of 
death  of  any  person  from  accidental  causes,  which  may  issue  combined  or 
separately,  life,  accident  or  health  insurance  policies  with  not  less  than 
an  actual  paid  up  capital  of  twenty-five  thousand  dollars,  provided,  that 
all  such  companies  shall  be  subject  to  all  the  laws  regulating  life  in- 
surance companies  in  this  State  not  inconsistent  with  the  provisions  of 
this  article  (section) ;  and  provided  further,  that  such  companies  shall 
not  be  permitted  to  invest  their  assets  in  other  than  Texas  securities  as 
defined  by  the  laws  of  this  State  regulating  the  investments  of  life 
insurance  companies.     (E.  S.,  Art.  4762.) 

Note. — A  life  insurance  company  cannpt  amend  its  charter,  reducing  its  cap- 
ital stock  below  $100,000,  nor  thereby  place  itself  in  a  position  where  it  can 
transact  business  by  authority  or  above  provision  on  the  industrial  plan.  (Opin- 
ion of  Attorney  General,  August  20,  1910.) 

Dividends,  Unlawful — Commissioner  Shall  Revoke  Authority. 

119.  It  shall  not  be  lawful  for  any  insurance  company  organized 
under  the  laws  of  this  State  to  make  any  dividends  except  from  surplus- 
profits  arising  from  its  business,  and  in  estimating  such  profits  there 
shall  be  reserved  therefrom  the  lawful  reserve  on  'all  unexpired  risks, 
and  also  the  amount  of  all  unpaid  losses  whether  adjusted  or  unadjusted 
and  all  other  debts  due  and  payable,  or  to  become  due  and  payable  by 
the  company.     Any  dividends  made  contrary  to  the  provisions  of  this 
article  shall  subject  the  company  making  them  to  a  forfeiture  of  its 
charter,  and  the  Commissioner  of  Insurance  shall  forthwith  revoke  its 
certificate  of  authority;  provided,  that  he  shall  give  such  company  at 
least  ten  days'  notice  in  writing  of  his  intention  to  revoke  such  cer- 
tificate, stating  specifically  the  reasons  why  he  intends  to  revoke  same. 
(E.  S.,  Art.  4763.) 


42  INSURANCE  LAWS  OF  TEXAS. 

Corporations,  Partnerships,  Joint  Stock  Associations  or  Trust  Estates  May 
Be  Beneficiaries  in  Life  Insurance  Policies. 

120..  Any  corporation,  partnership,  joint  stock  association  or  any 
trust  estate  doing  business  for  profit,  may  be  named  beneficiary  in  any 
policy  of  insurance  issued  by  a  legal  reserve  life  insurance  company  on 
the  life  of  any  officer  or  stockholder  of  said  corporation,  joint  stock 
association  or  trust  estate  or  any  partnership  or  member  thereof  may 
be  the  beneficiary  in  any  policy  of  insurance  issued  by  a  legal  reserve 
life  insurance  company  upon  the  life  of  any  member  of  said  partner- 
ship, or  any  religious,  educational,  eleemosynary,  charitable  or  benevolent 
institution  or  undertaking  may  be  named  beneficiary  in  any  policy  of 
life  insurance  issued  by  any  legal  reserve  life  insurance  company  upon 
the  life  of  any  individual.  The  beneficiaries  aforenamed  shall  have  an 
insurable  interest  for  the  full  face  of  the  policy  and  shall  be  entitled  to 
collect  same.  On  all  policies  of  life  insurance  heretofore  issued  by  legal 
reserve  companies  in  which  any  of  the  aforenamed  shall  have  been  desig- 
nated beneficiaries  in  the  policies,,  said  beneficiaries  shall  have  an  in- 
surable interest  to  the  full  extent  of  the  face  of  the  policy  and  be  entitled 
to  collect  same.  (Sec.  1,  Chap.  84,  Acts  37th  Leg.) 


CHAPTER  V. 

XIFE,    HEALTH    AND    ACCIDENT    INSURANCE    COMPANIES FOREIGN. 

'Shall  File  Statement—  Statement  Shall  Contain. 

121.  Any  life  insurance  company,  or  accident  insurance  company, 
•or  life  and  accident,  health  and  accident,  or  life,  health  and  accident 
insurance  company,  incorporated  under  the  laws  of  any  other  State, 
'Territory  or  country,  desiring  to  transact  the  business  of  such  insur- 
ance in  this  State  shall  furnish  said  Commissioner  of  Insurance  and 
Banking  with  a  written  or  printed  statement  under  oath  of  the  presi- 
dent or  vice-president  or  treasurer  and  secretary  of  such  company,  which 
statement  shall  show: 

(a)  The  name  and  locality  of  the  company. 

(b)  The  amount  of  its  capital  stock. 

(c)  Amount  of  its  capital  stock  paid  up. 

(d)  The   assets   of   the   company,   including,   first,   the   amount   of 
cash  on  hand  and  in  the  hands  of  other  persons,  naming  such  persons 
and  their  residences;  second,  real  estate  unencumbered,  where  situated 
and  its  value;  third,  the  bonds  owned  by  the  company  and  how  they 
are  secured,  with  the  rate  of  interest  thereon;  fourth,  debts  due  the 
company  secured  by  mortgage,  describing  the  property  mortgaged  and 
its  market  value;  fifth,  debts  otherwise  secured,  stating  how  secured; 
sixth,  debts  for  premiums ;  seventh,  all  other  moneys  and  securities. 

(e)  Amount  of  liabilities  to  the  company,  stating  the  name  of  the 
person  or  corporation  to  whom  liable. 

(f)  Losses  adjusted  and  due. 

{g)     Losses  adjusted  and  not  due. 

(h)     Losses  adjusted. 

(i)     Losses  in  suspense  and  from  what  cause. 


INSURANCE   LAWS   OF   TEXAS.  4? 

(j)  All  other  claims  against  the  company,  describing  the  same; 
provided,  that  the  Commissioner  of  Insurance  and  Banking  may  re- 
quire any  additional  fact  to  be  shown  by  such  annual  statement;  each 
such  company  shall  be  required  to  file  a  similar  statement  not  later 
than  March  1st  of  each  year.  (E.  S.,  Art.  4765.) 

Articles  of  Incorporation  and  By-Laws  Shall  Be  Filed. 

122.  Such  foreign  life   insurance   company,   or  accident   insurance 
company,  or  life  and  accident,  health  and  accident,  or  life,  health  and 
accident  insurance  company,  shall  accompany  such   statement  with   a 
certified  copy  of  its  acts  or  articles  of  incorporation,  and  all  amend- 
ments thereto,  and  a  copy  of  its  by-laws,  together  with  the  name  and 
residence  of  each  of  its  officers  and  directors,  and  all  of  which  shall 
be  certified  under  the  hand  of  the  president  or  secretary  of  such  com- 
pany.    (E.  S.,  Art.  4766.) 

Capital  Stock,  Shall  Have. 

123.  No   such   foreign   life  insurance  company,   accident  insurance 
company,  or  life  and  accident,  health  and  accident,  or  life,  health  and 
accident  insurance  company,  shall  transact  any  business  of  insurance- 
in  this   State  unless  such  company  is  possessed  of   at  least   $100,000' 
of  actual  paid  up  in  cash  money  capital  invested  in  such  securities  as 
provided  under  the  laws  of  the  State,  Territory  or  country  of  its  crea- 
tion ;  and  no  mutual  life  insurance  company  or  accident  insurance  com- 
pany, or  life  and   accident,  health   and   accident,   or  life,   health   and 
accident  insurance  company  operating  on  the  old  line  or  legal  reserve 
basis,  shall  transact  any  business  of  insurance  in  this   State,  unless 
such  company  is  possessed  of  at  least  $100,000  of  net  surplus  assets 
invested  in  securities  provided  for  under  the,  laws  of  the  State,  Terri- 
tory  or  country  of  its  creation.,    (E.  S.,  Art.  4767.) 

Note. — The  guaranty  fund  certificates  of  a  foreign  life  insurance  company- 
which  were  issued  by  authority  of  a  statute  of  the  State  in  which  the  company 
was  incorporated  and  organized,  and  which  certificates  contain  the  following 
provisions:  1st,  the  holders  shall  receive  at  least  6  per  cent  per  annum  inter- 
est hereon  from  the  expense  fund  of  the  company;  2nd,  the  claims  of  the 
holders  shall  be  inferior  to  the  claims  of  the  policyholders  as  against  the  funds 
of  the  company,  and  3rd,  in  case  the  company  ceased  to  do  business,  upon  the 
winding  up  of  the  affairs  of  the  company,  the  certificate  holders  shall  be  en- 
titled to  receive  payment  pro  rata  from  the  assets  of  the  company  after  the 
claims  of  the  policy  holders  have  been  met;  while  these  provisions  and  the  issu- 
ance of  such  certificates  create  a  contingent  liability  of  the  company,  such  a 
liability  is  not  such  a  one  as  should  be  charged  against  the  assets  of  the  com- 
pany in  its  statement  of  financial  condition,  in  ascertaining  whether  or  not  it 
has  the  net  surplus  assets  required  in  above  section.  (Opinion  of  Attorney 
General,  October  24,  1912.) 

bhall  Make  Deposits  as  Is  Required  of  Companies  of  This  State  in  Their 
Home  State. 

124.  Whenever  the  existing  or  future  laws  of  any  other  State  or 
Territory  of  the  United  States,  or  of  any  other  country,  shall  require 
of  life  insurance  companies,  accident  insurance  companies,  or  life  and 
accident,  health   and  accident,  or  life,  health  and   accident   insurance 
companies,  incorporated  by  this  State,  any  deposit  of  securities  in  such 


44  INSURANCE  LAWS  OF  TEXAS. 

other  State,  Territory  or  country  before  transacting  insurance  busi- 
ness therein,  then,  and  in  every  such  case,  all  insurance  companies  of 
such  State  shall,  before  doing  any  insurance  business  in  this  State,  be 
required  to  make  the  same  deposit  of  securities  with  the  Treasurer  of 
this  State.  (E.  S.,  Art.  4768.) 

Shall  Deposit  With  State  Treasurer. 

125.  No  foreign  life  insurance  company,  or  accident  insurance  com- 
pany, or  life  and  accident,  health  and  accident,  or  life,  health  and 
accident  insurance  company  incorporated  by  or  organized  under  the 
laws  of  any  foreign  government  shall  transact  business  in  this  State, 
unless  it  shall  first  deposit  and  keep  deposited  with  the  Treasurer  of 
this  State,  for  the  benefit  of  the  policyholders  of  such  company,  citi- 
zens or  residents  of  the  United  States,  bonds  or  securities  of  the  United 
States  or  the  State  of  Texas  to  the  amount  of  $100,000.     (E.  S.,  Art. 
4769.) 

Deposit  Liable  for  Judgment. 

126.  The  deposit  required  by  the  preceding  article  (section)  shall  be 
held  liable  to  pay  the  judgments  of  policyholders  in  such  company  and 
may  be  so  decreed  by  the  court  adjudicating  the  same.     (E.  S.,  Art. 
4770.) 

deposit  Not  Required,  When — Shall  File  Certificate  of  Deposit. 

127.  If  the  deposit  required  by  Article  4769  (Section  125)  has  been 
made  in  any  State  of  the  United  States,  under  the  laws  of  such  State 
in  such  manner  as  to  secure  equally  all  the  policyholders  of  such  com- 
pany who  are  citizens  and  residents  of  the  United  States,  then  no  de- 
posit shall  be  required  in  this  State,  but  a  certificate  of  such  deposit 
under  the  hand  and  seal  of  the  officer  of  such  other  State  with  whom 
the  same  has  been  made  shall  be  filed  with  Commissioner  of  Insurance 
and  Banking. ;  (E.  S.,  Art.  4771.) 

Assets  Shall  Be  Invested  In. 

128.  The  assets  of  any  company  not  organized  under  the  laws  of 
this  State  shall  be  invested  in  securities  or  property  of  the  same  classes 
permitted  by  the  laws  of  this  State  as  to  home  companies  or  by  other 
laws  of  this  State  in  other  securities  approved  by  the  Commissioner  of 
Insurance   and   Banking,   as   being   of   substantially   the    same   grade. 
(E.  S.,  Art.  4772.) 

Officer  Making  False  Statement  Guilty  of. 

129.  Any   officer  of   any  insurance   company  not   organized   under 
the  laws  of  this  State,  who  shall  file  with  the  Commissioner  of  Insur- 
ance and  Banking  any  statement,   report  or  other  paper  required  or 
provided  for  by  law  to  be  so  filed,  which  shall  contain  any  material 
statement  or  fact  known  to  be  false  by  the  person  filing  the  same,  or 
any  person  who  shall  execute  or  cause  to  be  executed  any  such  false 
statement,  report  or  other  paper"  to  be  so  filed,  shall  be  deemed  guilty 
of  a  felony  and  upon  conviction  shall  be  punished  by  imprisonment  in 


INSURANCE  LAWS  OF  TEXAS.  45 

the  penitentiary  for  a  term  of  not  less  than  one  year.     (P.  Cv  Art. 
693.) 

Power  of  Attorney,  Shall  File. 

130.  That  each  life  insurance  company  engaged  in  doing  or  de- 
siring to  do  business  in  this  State  shall  file  with  the  Commissioner  of 
Insurance  and  Banking  of  this  State  an  irrevocable  power  of  attorney 
duly  executed,  constituting  and  appointing  the  Commissioner  of  Insur- 
ance and  Banking  of  this  State  and  his  successors  in  office,  or  any 
officer  or  board  which  may  hereafter  be  clothed  with  the  powers  and 
duties  now  devolving  upon  said  Commissioner,  its  duly  authorized  agent 
and  attorney  in  fact  for  the  purpose  of  accepting  service  for  it  or 
being  served  with  citation  in  any  suit  brought  against  it  in  any  court 
of  this  State,  by  any  person,  or  by  or  to  or  for  the  use  of  the  State 
of  Texas,  and  consenting  that  the  service  of  any  civil  process  upon 
him  as  its  attorney  for  such  purpose  in  any  such  suit  or  proceeding 
shall  be  taken  and  held  to  be  valid,  waiving  all  claim  and  right  to 
object  to  such  service  or  to  any  error  by  reason  of  such  service;  and 
such  appointment,  agency  and  power  of  attorney  shall  by  its  terms 
and  recitals  provide  that  it  shall  continue  and  remain  in  force  and 
effect  so  long  as  such  company  continues  to  do  business  in  this  State 
or  to  collect  premiums  of  insurance  from  citizens  of  this  State,  and 
so  long  as  it  shall  have  outstanding  policies  in  this  State,  and  until 
all  claims  of  every  character  held  by  the  citizens  of  this  State,  or  by 
the  State  of  Texas  against  such  company  shall  have  been  settled.  And 
said  power  of  attorney  shall  be  signed  by  the  president  or  a  vice-presi- 
dent and  the  secretary  of  such  company,  whose  signatures  shall  be 
attested  by  the  seal  of  the  company,  and  said  officer  signing  the  same 
shall  acknowledge  its  execution  before  an  officer  authorized  by  the 
laws  of  this  State  to  take  acknowledgments;  and  the  said  power  of 
attorney  shall  be  embodied  in  and  approved  by  a  resolution  of  the 
board  of  directors  of  such  company,  and  a  copy  of  such  resolution, 
duly  certified  to  by  the  proper  officers  of  said  company,  shall  be  filed 
with  the  said  power  of  attorney  in  the  office  of  the  Commissioner  of 
Insurance  and  Banking  of  this  State  and  shall  be  recorded  by  him  in 
a  book  kept  for  that  purpose,  there  to  remain  a  permanent  record  of 
said  department.  (E.  S.,  Art.  4773.) 

Commissioner  Shall  Accept  Service — Duties  When  Accepting  Same. 

131.  Whenever  the  Commissioner  of  Insurance  and  Banking  of  this 
State  shall  accept  service  or  be  served  with  citation  in  any  suit  pend- 
ing against  any  life  insurance  company  in  this  State  as  provided  by 
the  preceding  article  (Sec.  130)  he  shall  immediately  enclose  the  copy  of 
the  citation  served  upon  him,  or  a  substantial  copy  thereof,  in  a  letter 
properly  addressed  to  the  general  manager  or  general  agent  of  the  com- 
pany against  whom  such  service  is  had,  if  it  shall  have  a  general 
manager  or  general  agent  within  this  State,  and  if  not,  then  to  the 
home  office  of  the  company,  and  shall  forward  the  same  by  registered 
mail,  postage  prepaid,  and  no  judgment  by  default  shall  be  taken  in 
any  such  cause  until  after  the  expiration  of  at  least  ten  days  after 
the  general  agent  or  general  manager  of  such  company,  or  the  com- 


'J6  INSURANCE  LAWS  OF  TEXAS. 

pany  at  its  home  office,  as  the  case  may  be,  shall  have  received  such 
copy  of  such  citation,  and  the  presumption  shall  obtain  until  rebutted 
that  such  notice  was  received  by  such  agent  or  company  in  due  course 
of  mail  after  being  deposited  in  the  mail  at  Austin.  (E.  S.,  Art. 

4774.) 


CHAPTEE  VI. 

INVESTMENT    AND    PREMIUM    RECEIPTS    TAXES    OF    LIFE    INSURANCE 

COMPANIES. 
Shall  Invest. 

132.  Each  and  every  life  insurance  company  now  engaged  or  that 
may  hereafter  engage  in  transacting  the  business  of  life  insurance  in 
this   State   shall,   as   a   condition   of   its   right   to   transact   such   busi- 
ness in   this   State,   invest  and  keep  invested   in   Texas   securities,   as 
hereinafter  defined  and  in   Texas  real  estate  as  hereinafter  provided, 
a  sum  of  money  equal  to  at  least  75  per  cent  of  the  aggregate  amount 
of  the  legal  reserve  required  by  the  laws  of  the%  State  of  its  domicile 
to  be  maintained  on  account  of  its  policies  of  insurance  in  force  writ- 
ten upon  the  lives  of  citizens  of  this  State,  which  reserve  is  herein- 
after denominated  as  its  "Texas  Eeserves,"  and   each   such   company 
securing  a  certificate  of  authority  to  do  business  in  this   State   shall 
be  deemed  to  have  accepted  such  certificate  subject  to  all  of  the  con- 
ditions and  requirements  of  this  chapter.     (E.  S.,  Art.  4775.) 

Note. —  (1)  Life  insurance  companies  doing  a  re-insurance  business  only  are 
not  required  to  invest  their  reserves  in  Texas  securities.  (Opinion  of  Attorney 
General,  January  17,  1911.) 

(2)  Foreign  insurance  companies  must  have  their  funds  invested  in  securi- 
ties of  substantially  the  grade  as  is  required  of  domestic  companies,  and  unless 
they  do,  they  cannot  receive  a  permit  to  transact  business  in  this  State.  (Opin- 
ion of  Attorney  General,  August  9,  1916.) 

Texas  Securities,  Definition  of. 

133.  The  phrase  "Texas  Securities"  as  used  in  this  chapter  shall 
be  held  to  include  bonds  of  the  State  of  Texas,  or  of  any  county,  city, 
town,    school   district   or    other   municipality    or   subdivision   which    is 
now  or  may  hereafter  be  constituted  or  organized  and  authorized  to 
issue  bonds  under  the  Constitution  and  laws  of  this  State,  promissory 
notes   and  other  obligations,  the  payment   of  which   is   secured   by   a 
mortgage,  deed  of  trust  or  other  valid  lien  upon  unencumbered  real 
estate  situated  in  this  State,  the  title  to  which  real  estate  is  valid  and 
the  market  value  for  which  is  double .  the  amount  loaned  thereon,  ex- 
clusive of  buildings,  unless  such  buildings  are  insured  and  kept  in- 
sured in  some  company  authorized  to  transact  business  in  this  State, 
and   the   policy   or  policies   transferred   to   the   company   taking   such 
mortgage  or  lien;  the  first  mortgage  bonds  of  any  solvent  corporation 
incorporated  under  the  laws  of  this  State  and  doing  business  in  this 
State,  which  has  not  in  five  years  next  preceding  the  date  of  the  in- 
vestment by  such  company  in  such  mortgage  bonds  defaulted  for  more 
than  three  months  in  the  payment  of  interest  upon  its  bonds  or  in- 
debtedness, the  market  value  of  which  bonds  is  equal  to  the  amount 


INSURANCE  LAWS  OB'  TEXAS.  47 

invested  therein;  and  loans  made  to  policyholders  on  the  sole  security 
of  the  reserve  values  of  their  policies.  And  the  investments  required 
by  this  act  or  any  part  thereof  may  be  made  by  the  purchase  of  not 
more  than  one  building  site,  and  in  the  erection  thereon  of  not  more 
than  one  office  building  or  in  the  purchase  at  its  reasonable  market 
value  of  such  office  building  already  constructed  and  the  ground  upon 
which  the  same  is  located  in  any  city  of  the  State,  having  a  popula- 
tion of  more  than  4000  inhabitants.  And  all  real  estate  owned  by  life 
insurance  companies  in  this  State  on  December  31,  1909,  and  all  there- 
after acquired  under  the  provisions  of  this  chapter,  or  by  foreclosure 
of  a  lien  thereon  shall  be  treated,  to  the  extent  of  its  reasonable  mar- 
ket value,  as  a  part  of  the  investments  required  by  this  chapter.  And 
"Texas  Securities"  as  used  in  the  following  sections  of  this  chapter  shall 
be  held  to  include  every  character  of  investment  authorized  by  the  terms 
of  this  article  (section).  (E.  S.,  Art.  4776.) 

Note. — A  life  insurance  company,  organized  under  the  laws  of  Texas,  may  law- 
fully invest  its  legal  reserve  in  district  road  and  bridge  bonds  issued  by  a  sub- 
division of  a  county.  (Opinion  of  Attorney  General,  February  13,  1920.) 

Bonds  Issued  Under  Farm  Loan  Act  Are  Texas  Securities. 

134.  All  bonds  issued  under  and  by  virtue  of  the  Federal  Farm  Loan 
Act,  approved  by  the  President  of  the  United  States  July  17,  1916, 
which  is  "An  Act  to  provide  capital  for  agricultural  development,  to 
create  standard  forms  of  investments  based  upon  farm  mortgages;  to 
equalize   rates  of  interest  upon  farm  loans,  to  furnish   a  market  for 
United   States  bonds,  to  create  government  depositaries  and  financial 
agents  for  the  United  States,  and  for  other  purposes,"  shall  hereafter 
be  lawful  investment  for  all  fiduciary  and  trust  funds  in  this  State  and 
may  be  accepted  as  security  for  all  public  deposits  where  deposits  of 
bonds  or  mortgages  are  authorized  by  law  to  be  accepted;  such  bonds 
shall  be  lawful  investment  for  all  funds  which  may  be  lawfully  invested 
by  guardians,  administrators,  trustees  and  receivers,  for  saving  depart- 
ments of  banks  incorporated  under  the  laws  of  Texas,  for  banks,  sav- 
ings banks  and  trust  companies  chartered  under  the  laws  of  Texas,  and 
for  all  insurance  companies  of  every  kind  and  character  chartered  or 
transacting  business  under  the  laws  of  Texas,  where  investments  are 
required  or  permitted  by  the  laws  of  this  State;  provided  further,  that 
where  such  bonds  are  issued  against  and  secured  by  promissory  notes 
or  other  obligations,  the  payment  of  which  is  secured  by  mortgage,  deed 
of  trust  or  other  valid  lien  upon  unencumbered  real  estate  situated  in 
this  State,  then  such  bond  or  bonds  so  issued  and  so  secured  shall  be 
regarded  for  investment  purposes  by  insurance  companies  as   "Texas 
Securities/'  within  the  meaning  of  the  laws  of  this   State  governing 
such  investments.     (Sec.  1,  Chap.  63,  Acts  35th  Leg.) 

Investments  Shall  Be  Made,  How. 

135.  The   investments  required   by  this   chapter   shall   be  made   as 
follows : 

(a)  Each  life  insurance  company  which  had  a  certificate  of  au- 
thority to  transact  business  in  this  State  April  2,  1909,  the  total  amount 
of  whose  investments  in  Texas  securities  as  of  December  31,  1908,  was 


4S  INSURANCE  LAWS  OF  TEXAS. 

equal  to  or  exceeded  75  per  cent  of  the  amount  of  its  Texas  reserves 
as  of  that  date,  shall  have  so  invested  not  later  than  January  31st  in 
each  year  a  sum  of  money  equal  to  75  per  cent  of  the  amount  of  its 
Texas  reserves  as  of  the  preceding  December  31st. 

(b)  Each  life  insurance  company  which  had  a  certificate  of  au- 
thority to  transact  business  in  this  State  on  April  2,  1909,  the  amount 
of  whose  investments  in  Texas  securities  as  of  December  31,  1908,  was 
less  than  75  per  cent  of  the  amount  of  its  Texas  reserves  as  of  said 
date,  shall  have  so  invested,  not  later  than  January  31st  in  each  year, 
a  sum  at  least  equal  to  75  per  cent  of  the  amount  by  which  its  Texas 
reserves  as  of  December  31st  preceding  exceeded  the   amount  of  its 
Texas  reserves  as  of  December  31,  1908,  added  to  the  amount  of  its 
total  investments  in  Texas  securities  as  of  said  date;  and  each  such 
company  shall,  in  addition,  have  so  invested  not  later  than  January 
31,  1910,  a  sum  at  least  equal  to  10  per  cent  of  the  amount  by  which 
75  per  cent  of  its  Texas  reserves  as  of  December  31,  1908,  exceeded 
the  amount  of  its  investments  in  Texas  securities  as  of  said  date,  and 
annually  thereafter  it  shall  have  invested,  not  later  than  January  31st, 
an  additional  10  per  cent  of  the  amount  of  such  excess  until  the  total 
amount  of  its  investments  in  Texas  securities  shall  at  least  equal  75 
per  cent  of  its  Texas  reserves. 

(c)  Each  life  insurance  company  not  having  a  certificate  of  au- 
thority to  transact  business  in  this  State  on  April  2,  1909,  or  that  may 
thereafter  discontinue  writing  new  business  under  such  certificate,  shall, 
if  it  again  obtain  a  certificate  of  authority  to  transact  business  in 
this  State,  be  required  to  have  invested  in  Texas  securities  annually 
as  above  provided,  a  sum  equal  to  75  per  cent  of  its  Texas  reserves; 
provided,  that  if  on  December  31st  preceding  the  issuance  of  such  cer- 
tificate of  authority  the  amount  of  its  investments  in  Texas  securities 
was  less  than  75  per  cent  of  the  amount  of  its  Texas  reserves,  it 'shall 
be  required  to  have  so  invested  annually,  as  above  provided,  -a  sum 
equal  to  75  per  cent  of  the  increase  in  its  Texas  reserves  since  Decem- 
ber 31st  last  preceding  the  issuance  of  its  certificate  of  authority,  added 
to  the  amount  of  its  total  investment  in  Texas  securities  as  of  said 
date;  and  in  addition  it  shall,  not  later  than  January  31st  in  each 
year  after  the  issuance  of  its  certificate  of  authority,  have  so  invested 
10  per  cent  of  the  amount  by  which  75  per  cent  of  its  Texas  reserves 
as  of  December  31st  preceding  the  date  of  said  certificate  exceeded 
the  amount  of  its  total  investments  in  Texas  securities  as  of  that  date, 
and  shall  have  invested  annually  thereafter,  not  later  than  January 
31st,  an  additional  10  per  cent  of  such  excess  until  the  total  amount 
of  its  investments  in  Texas  securities  shall  at  least  equal  75  per  cent 
of  the  amount  of  its  Texas  reserves.     The  proportionate   amount  of 
the  Texas  reserves  required  by  this  section  to  be  invested  in  Texas 
securities  as  of   any   date,   shall  thereafter  be   maintained;   provided, 
that  such  investment  shall  not  be  required  to  be  made  by   any  life 
insurance  company  after  it  has  ceased  to   do  business   of  Ufa   insur- 
ance or  to  write  policies  of  life  insurance  in  this  State,     (E.  S.,  Art. 
4777.) 


INSURANCE  LAWS  OF  TEXAS.  49 

Shall  File  Report  of  Reserve. 

136.  That  each  life  insurance  company  doing  business  in  this  State 
shall,  not  later  than  ten  days  after  January  31st  of  each  year,  file 
with  the*  Commissioner  of  Insurance  and  Banking  of  this   State,  on 
a  blank  prepared  and  furnished  by  him  for  that  purpose,   a  report 
showing  the  entire  amount  of  the  reserve  on  its  entire  business  in  force 
in  this  State  on  December  31st  preceding,  and  an  itemized  schedule 
of  its  investments  in  Texas  securities,  which  report  shall  be  sworn  to 
by  either  the  president  or  a  vice-president  and  the  secretary  of  such 
company.     Such  report  shall  contain  such  other  information  as  may 
be  required  by  the  Commissioner  to  determine  whether  or  not  such 
company  has  continuously  and  in  good  faith  complied  with  this  law, 
and  for  that  purpose  the  Commissioner  may,  whenever  he  shall  deem 
it  proper,  require  such  special  or  supplemental  reports  as  he  may  deem 
necessary.     (E.  S.,  Art.  4778.) 

Shall  File  Report  of  Premiums. 

137.  Each  life  insurance  company  not  organized  under  the  laws 
of  this  State  transacting  business  in  this  State  shall  on  or  before  the 
first  day  of  March  make  a  report  to  the  Commissioner  of  Insurance 
and  Banking  of  this  State,  which  report  shall  be  sworn  to  by  either  the 
president  or  vice-president  and  secretary  or  treasurer  of  such  company, 
and  which  shall  show  the  gross  amount  of  premiums  collected  during 
the  year  ending  on  December  31st  preceding  from  citizens  of  this  State 
upon  policies  of  insurance  and  each  such  company  shall  pay  annually 
an  occupation  tax  equal  to  3  per  cent  of  such  gross  premium  receipts; 
provided,  that  when  the  report  of  the  investment  in  Texas  securities, 
as  defined  by  law,  of  any  such  companies  as  of  December  31st  of  any 
year,  shall  show  that  it  has  invested  on  said  date  as  much  as  30  per 
cent  of  its  total  Texas  reserves,  as  defined  by  law,  in  promissory  notes 
or  other  obligations  secured  by  mortgage,  deed  of  trust  or  other  lien 
on  Texas  real  estate,  the  rate  of  occupation  tax  shall  be  reduced  to  2.6 
per  cent;  and  when  such  report  shall  show  that  such  company  has  so 
invested  on  said  date  as  much  as  60  per  cent  of  its  total  Texas  reserve, 
the  rate  of  such  occupation  tax  shall  be  reduced  to  2.3  per  cent;  and 
when  such  a  report  shall  show  that  such  company  has  so  invested,  on 
said  date,  as  much  as  75  per  cent  of  its  total  Texas  reserve,  the  rate  of 
such  occupation  tax  shall  be  reduced  to  2  per  cent;  provided,  that  all 
such  companies  shall  in  any  event  make  the  investments  in  Texas  se- 
curities in  proportion  to  the  amount  of  Texas  reserves  as  required  by 
law.    Such  occupation  taxes  shall  be  for  and  on  account  of  the  business 
transacted  within  this  State  during  the  calendar  year  in  which  such 
premiums  were  collected  or  for  that  portion  thereof  during  which  the 
company  shall  have  transacted  business  in  this  State  while  this  act  was 
in  force  and  effect.     (E.  S.,  Art.  4779.) 

Note. —  ( 1 )  Reserves  on  life  insurance  policies  represent  what  the  company 
issuing  the  policies  must  at  all  times  have  on  hand  to  meet  its  liabilities  on 
its  policies.  In  determining  the  percentage  of  total  Texas  reserves  which  must 
be  invested  in  Texas  real  estate  securities  to  secure  a  reduction  of  taxes,  no  de- 
duction should  be  made  from  amount  of  legal  reserve  on  Texas  policies  on  ac- 
count of  Texas  policy  loans.  (Opinion  of  Attorney  General,  May  1,  1914.) 

(2)     A  life  insurance  company  doing  business  under  the  assessment  or  nat- 


50  INSUHANCE  LAWS  OF  TEXAS. 

ural  premium  plan  is   required   to  pay  occupation  taxes,   as   required  by  above 
Section  137.      (Opinion  of  Attorney  General,  June  27,  1914.) 

(3)  Certain  bonds  issued  by  the  Union  Terminal  Company  of  Dallas,  although 
secured  by  mortgage  on  the  real  estate  and  other  property  of  the  Terminal  Com- 
pany as  an  investment  of  a  life  insurance  company,  come  under  the  class  of 
securities  described  in  the  statute  as  bonds  of  a  corporation,  and  are  not  of  the 
same  class  of  securities  as  those  referred  to  in  Articles  4776  and  4779  of  the 
Revised  Statutes  as  "promissory  notes  and  other  obligations  the  payment  of 
which  is  secured  by  a  mortgage,  deed  of  trust,  or  other  lien  on  Texas  real  estate," 
etc.  The  mere  fact  that  the  bonds  of  a  railway  company  or  other  corporation 
are  secured  by  property  including  real  estate  does  not  take  them  out  of  their 
classification  as  corporation  or  railroad  bonds.  (Opinion  of  Attorney  General, 
July  19,  1921.) 

Commissioner's  Duties  on  Receiving  Report. 

138.  Upon  the  receipt  of  sworn  statements  showing  the  gross  pre- 
mium receipts  of  such  company  the   Commissioner  of  Insurance  and 
Banking  of  this  State  shall  certify  to  the  Treasurer  of  this  State  the 
amount  of  taxes  due  by  such  company  for  the  preceding  year;  which 
taxes  shall  be  paid  to  the  State  Treasurer  for  the  use  of  the  State  by 
such  company.     Upon  his  receipt  of  such  certificate  and  the  payment 
of  such  tax,  the  Treasurer  shall  execute  a  receipt  therefor,  which  re- 
ceipt shall  be  evidence  of  the  payment  of  such  taxes  and  no  such  life 
insurance  company  shall  receive  a  certificate  of  authority  to  do  busi- 
ness in  this  State  until  such  taxes  are  paid.     If  upon  the  examination 
of  any  company,  or  in  any  other  manner,  the  Commissioner  of  Insur- 
ance and  Banking  shall  be  informed  that  the  gross  premium  receipts 
of  any  year  exceed  in  amount  those  shown  by  the  report  thereof  thereto- 
fore made  as  above  provided,  it  shall  be  the  duty  of  such  Commissioner 
to   file   with   the   State   Treasurer   a   supplemental   certificate   showing 
the  additional  amount  of  taxes  due  by  such  company,  which  shall  be 
paid  by  such  company  upon  notice  thereof.     It  shall  be  the  duty  of 
the  State  Treasurer  of  this  State,  if  within  fifteen  days  after  the  re- 
ceipt by  him  of  any  certificate  or  supplemental  certificate  provided  for 
by  this  article  the  taxes  due  as  shown  thereby  have  not  been  paid,  to 
report  the  facts  to  the  Attorney  General,  who  shall  immediately  insti- 
tute suit  in  the  proper  court  of  Travis  county  to  recover  such  taxes. 
(R.  S.,  Art.  4780.) 

Other  Occupation  Tax  Shall  Not  Be  Paid. 

139.  No  occupation  tax  other  than  herein  imposed  shall  be  levied 
by  the  State  or  any  county,  city  or  town  upon  any  life  insurance  com- 
pany herein  subject  to  the  occupation  tax  in  proportion  to  its  gross 
premium  receipts  or  its  agents.     The  occupation  tax  imposed  by  this 
act  upon   life  insurance   companies   shall   be   the  sole   occupation   tax 
which  any  company  doing  business  in  this  State  under  the  provisions 
of  this  chapter  shall  be  required  to  pay.     (R.  S.,  Art.  4781.) 

Companies 'Accepting  Certificate  Shall  Hereafter  Pay  Occupation  Tax. 

140.  Each  life   insurance   company  not   organized  under  the   laws 
of  this   State  hereafter  granted  a  certificate  of  authority  to  transact 
business  in  this   State  shall  be  deemed  to  have  accepted  such  certifi- 
cate  and   to   transact  such  business   hereunder   subject   to   the   condi- 
tions and  requirements  that  after  it  shall  cease  to  transact  new  busi- 


INSURANCE  LAWS  OF  TEXAS.  51 

ness  in  this  State  under  a  certificate  of  authority  and  so  long  as  it 
shall  continue  to  collect  renewal  premiums  from  citizens  of  this  State 
it  shall  be  subject  to  the  payment  of  the  same  occupation  tax  in  pro- 
portion to  its  gross  premiums  during  any  year  from,  citizens  of  this 
State  as  is  or  may  be  imposed  by  law  on  such  companies  transacting 
new  business  within  this  State  under  certificate  of  authority  during 
such  year;  provided,  that  the  rate  of  such,  tax  to  be  so  paid  by  any 
such  company  shall  never  exceed  the  rate  imposed  by  this  chapter  upon 
insurance  companies  transacting  business  in  this  State,  and  each  such 
company  shall  make  the  same  reports  of  its  gross  premium  receipts 
for  each  such  year  and  within  the  same  period  as  is  or  may  be  required 
of  such  companies  holding  certificates  of  authority;  and  shall  at  all 
times  be  subject  to  examination  by  the  Commissioner  of  Insurance  and 
Banking  or  some  one  selected  by  him  for  that  purpose,  in  the  same 
way  and  to  the  same  extent  as  is  or  may  be  required  of  companies 
transacting  new  business  under  certificates  of  authority  in  this  State, 
the  expenses  of  such  examination  to  be  paid  by  the  company  examined; 
and  the  respective  duties  of  the  Commissioner  of  Insurance  and  Bank- 
ing in  certifying  the  amount  of  such  taxes  and  of  the  State  Treasurer 
and  Attorney  General  in  their  collection  shall  be  the  same  as  are  or 
may  be  prescribed  respecting  taxes  due  from  companies  authorized  to 
transact  new  business  within  this  State.  (E.  S.,  Art.  4782.) 

Companies  Heretofore,   Now   or   Hereafter  Doing   Business   Shall   Report 
After  Ceasing  to  Do  Business. 

141.  Any  life  insurance  company  which  has  heretofore  been,  may 
now  be,  or  may  hereafter  be  engaged  in  writing  policies  of  insurance 
upon  the  lives  of  citizens  of  this   State  which  has  heretofore   ceased 
or  may  hereafter  cease  writing  such  policies  and  which  does  not  now 
or  may  not  hereafter  have  a  certificate  of  authority  to   transact  the 
business  of  life  insurance  in  this  State  but  which  has  continued  or 
may  continue  to  collect  renewal  or  other  premiums  upon  such  .policies 
shall,  before  it  may  again  obtain  a  certificate  of  authority  to  transact 
the  business  of  life  insurance  in  this  State,  report  under  oath  to  the 
Commissioner  of  Insurance  and  Banking  of  this  State,  the  gross  amount 
of  premiums  so  collected  from  citizens  of  this  State  upon  policies  of 
insurance  during  each  calendar  year  since  the  end  of  the  period  covered 
by  the  last  preceding  report  by  such  company  of  gross  premium  re- 
ceipts upon  which  it  paid   an  occupation  tax,   and   shall  pay   to   the 
State  a  sum  equal  to  the  percentage  of  its  gross  premium  receipts  for 
each  such  year  that  was  required  by  law  to  be  paid  as  occupation  taxes 
by  companies  doing  business  in  this  State  during  such  year  or  years 
and  upon  the  payment  of  such  sum  and  securing  a  certificate  of  author- 
ity to  do  business  in  this  State  the  penalties  provided  for  the  failure 
to  pay  such  taxes  and  make  such  reports  in  the  past  shall  be  remitted. 
(R.  S.,  Art.  4783.) 

May  Maintain  Agents  After  Failing  to  Renew  Certificate. 

142.  Any  company  which  shall  fail  to  renew  its  certificate  of  au- 
thority or  continue  to  write  new  business  in  this   State  shall,  never- 
theless, have  the  right  to  maintain  an  agent  or  agents  in  Texas  for 


52  INSURANCE  LAWS  OF  TEXAS. 

the  purpose  of  collecting  renewal  premiums  on  outstanding  business 
written  by  it  under  certificate  of  authority,,  and  also  for  the  purpose 
of  making  investments  as  provided  by  this  chapter.  (E.  S.,  Art.  4784.) 

Duties  of  Commissioner  When  Company  Fails  to  Comply  With  Provisions 
of  La"w. 

143.  If  any  life  insurance  company,  while  holding  a  certificate  of 
authority  to  transact  business  in  this  State,  shall  fail  or  refuse  to  com- 

ly  with  any  of  the  provisions  or  requirements  of  this  chapter,  it  shall 
the  duty  of  the  Commissioner  of  Insurance  and  Banking,  upon  ascer- 
taining such  fact,  to  notify  such  company  by  registered  letter,  prop- 
erly addressed  and  mailed,  or  by  any  other  form,  of  actual  notice  in 
writing  delivered  to  an  executive  officer  of  such  company,  of  his  inten- 
tion to  revoke  its  certificate  of  authority  to  transact  business  in  this 
State  at  the  expiration  of  thirty  days  after  the  mailing  of  such  regis- 
tered letter,  or  the  date  upon  which  such  actual  notice  is  served;  and 
if  such  provision  or  requirements  are  not  fully  complied  with  upon 
the  expiration  of  said  thirty  days,  it  shall  be  the  duty  of  the  Commis- 
sioner of  Insurance  and  Banking  to  revoke  the  certificate  of  authority 
of  such  company,  and  in  case  of  such  revocation  such  company  shall 
not  be  entitled  to  receive  another  certificate  of  authority  for  a  period 
of  one  year  and  until  it  shall  have  fully  and  in  good  faith  complied 
with  all  such  provisions  and  requirements  of  this  chapter.  Any  company 
feeling  itself  aggrieved  by  the  action  of  the  Commissioner  in  revoking 
its  certificate  of  authority  to  do  business  in  this  State  may  bring  suit 
against  him  in  the  court  of  Travis  county  having  jurisdiction  thereof, 
to  annul  and  vacate  the  order  revoking  such  certificate.  (R.  S.,  Art. 
4785.) 

Penalty  for  Failure  to  Make  Investment. 

144.  If  any  company  shall  intentionally  fail  or  refuse  to  make  the 
investments  required  by  this  chapter  or  make  any  report  required  by 
this  chapter,  or  to  make  any  special  report  requested  by  the  Commis- 
sioner of  Insurance  and  Banking  under  the  authority  of  this  chapter, 
or  generally  to  comply  with  any  provision  or  requirement  of  this  chap- 
ter while  holding  a  certificate  of  authority  to  transact  business  in  this 
State,  or  after  it  shall  cease  to  write  new  business  or  cease  to  hold  such 
certificate,  such  failure  or  refusal  shall  subject  such  company,  in  addi- 
tion to  the  penalty  provided  in  the  preceding  article   (Section  143), 
in  cases  of  which  said  article  (section)  may  be  applicable  to  the  pay- 
ment of  a  penalty  of  $25  per  day  for  each  day  that  such  company  shall 
remain  in  default  after  the  Commissioner  of  Insurance  and  Banking 
shall  notify  such  company  of  such  default,  in  the  manner  provided  in 
the  preceding  article  (Section  143  hereof),  to  be  recovered  in  a  suit  to 
be  brought  by  the  Attorney  General  in  behalf  of.  the  State  in  the  dis- 
trict court  of  Travis  county.     And  in  any  suit  that  may  be  brought  to 
recover  such  penalty  or  penalties  there  shall  be  a  prima  facie  presump- 
tion subject  to  rebuttal  that  any  default  that  may  have  occurred  was 
intentional,  and  that  the  notice  required  by  this  chapter  was  given  and 
the  burden  of  proof  shall  be  on  the  defendant  company  to  prove  that 
the  investments  required  by  this  chapter  were  made  as  herein  required 


INSURANCE  LAWS  OF  TEXAS.  53 

whenever  the  question  of  whether  or  not  such  investments  were  thus 
made  is  in  issue.     (R.  S.,  Art.  4786.) 

Companies  Organized  in  This  State  May  Deposit. 

145.  Any  life  insurance  company  organized  under  the  laws  of  this 
State  may,  at  its  option,  deposit  with  the  Treasurer  of  this  State  se- 
curities in  which  its  capital  stock  is  invested,  or  securities  equal  in 
amount  to  its  capital  stock  of  the  class  in  which  the  law  of  this  State 
permits  insurance  companies  to  invest  their  capital  stock,  and  may,  at 
its  option,  withdraw  the  same  or  any  part  thereof,  first  having  de- 
posited with  the  Treasurer  in  lieu  thereof  other  securities  of  like  class 
and  equal  amount  and  value  to  those  withdrawn.     Any  such  securities 
before  being  so  originally  deposited  or  substituted  shall  be  approved 
by  the  Commissioner  of  Insurance  and  Banking,  and  when  any  such 
deposit  is  made  the  Treasurer  shall  execute  to  the  company  making 
such  deposit  a  receipt  therefor,  giving  such  description  of  said  stock 
or  securities  as  will  identify  the  same,  and  stating  that  the  same  are 
held  on  deposit  as  the  capital  stock  investments  of  such  company,  and 
such  company  shall  have  the  right  to  advertise  such  fact  or  print  a 
copy  of  the  Treasurer's  receipt  on  the  policies  it  may  issue;  and  the 
proper  officers  or  agent  of  each  insurance  company  making  such  de- 
posit shall  be  permitted  at  all  reasonable  times  to  examine  such  securi- 
ties and  to  detach  coupons  therefrom  and  to  collect  interest  thereon, 
under  such  reasonable  rules  and  regulations  as  may  be  prescribed  by 
the  Treasurer  and  the   Commissioner  of  Insurance   and  Banking  of 
this  State.     The  deposit  herein  provided  for,  when  made  by  any  com- 
pany, shall  thereafter  be  maintained  so  long  as  said  company  shall  have 
outstanding  any  liability  to  its  policyholders  in  this   State.      (R.   S., 
Art.  4787.) 

Note. — See  Section  97  and  notes  thereunder. 

Investment  in  Texas  Securities  Does  Not  Apply  To. 

146.  The  provisions  of  this  chapter  requiring  investment  in  Texas 
securities  shall  not  apply  to  any  life  insurance  company  the  total  amount 
of  whose  Texas  reserve  does  not  exceed  $5000,  or  to  any  such  company 
doing  only  a  reinsurance  business  in  this  State,  but  all  of  the  other 
provisions  of  this  chapter  shall  apply  to  such  companies.     (R.  S.,  Art. 
4788.) 

Fraternal  Beneficiary  Association  Exempt. 

147.  The  provisions  of  this  chapter  shall  not  be  held  to  apply  to 
fraternal  beneficiary  associations,  as  defined  by  the  laws  of  this  State. 
(R.  S.,  Art.  4789.) 

Companies  Desiring  to  Loan  Funds  May  Secure  Permit. 

148.  That  any  life  insurance  company  not  desiring  to  engage  in 
the  business  of  writing  life  insurance  in  this   State,  but  desiring  to 
loan  its  funds  in  this  State,  may  obtain  a  permit  to  do  so  by  complying 
with  the  laws  of  this  State  relating  to  foreign  corporations  engaged 
in  loaning  money  in  this  State  without  being  required  to  secure  a  cer- 
tificate of  authority  to  write  life  insurance  in  this  State.     (R.  S.,  Art. 
4790.) 


54  INSURANCE  LAWS  OF  TEXAS. 

CHAPTEE  VII. 

ASSESSMENT   OR   NATURAL    PREMIUM    COMPANIES. 

Life  and  Casualty  Companies  —  Assessment  of  Natural  Premium  —  Admis- 
sion of. 

149.  Companies  or  associations  organized  under  the  laws  of  any 
other  State  of  the  United  States,  carrying  on  the  business  of  life  or  cas- 
ualty insurance  on  the  assessment  or  natural  premium  plan,  and  having 
cash  assets  of  a  sum  not  less  than  one  hundred  thousand  dollars,  invested 
as  required  by  the  laws  of  this  State  regulating  other  insurance  com- 
panies, shall  be  licensed  by  the  Commissioner  of  Insurance  and  Banking 
to  do  business  in  this  State,  and  be  subject  only  to  the  provisions  of  this 
chapter;  provided,  however,  that  such  company  or  association  shall  first 
file  with  the  Commissioner  of  Insurance  and  Banking  a  certified  copy  of 
its  charter,  a  written  agreement  appointing  the  Commissioner  of  Insur- 
ance and  Banking  and  his  successor  in  office  to  be  its  true  and  lawful  at- 
torney, upon  whom  all  lawful  process  in  any  action  or  proceeding  against 
it  may  be  served;  a  certificate  under  oath  of  its  president  and  secretary 
that  it  is  paying,  and  for  the  twelve  months  next  preceding  has  paid, 
the  maximum  amount  named  in  its  policies  or  certificates  in  full,  a  state- 
ment under  oath  of  its  president  and  secretary  of  its  business  for  the 
year  ending  December  31,  preceding;  a  certified  copy  of  its  constitution 
and  by-laws  and  a  copy  of  its  policy  and  application;  a  certificate  from 
the  proper  authority  in  its  home  State  that  said  company  or  association 
is  legally  entitled  to  do  business  in.  such  home  State  and  has  at  least  one 
hundred  thousand  dollars  surplus  assets  subject  to  its  indebtedness.  It 
shall  be  the  duty  of  the  Commissioner  of  Insurance  and  Banking  to  issue 
a  license  to  any  company  or  association  complying  with  the  provisions 
of  this  chapter,  and  every  such  company  or  association  shall  annually 
thereafter,  before  such  license  is  renewed,  file  with  the  Commissioner  of 
Insurance  and  Banking,  on  or  before  the  first  day  of  March,  a  statement 
under  oath  of  its  president  and  secretary,  or  like  officers,  of  its  business 
for  the  year  ending  December  31st  preceding.  (B.  S.,  Art.  4791.) 


.  —  (1)      Power    of   attorney   to    Commissioner   not    revocable.      (Attorney 
General's  opinion,  December   10,   1900.) 

(2)  This   article   does   not   require   $200,000    assets   over    all    liabilities,   but 
only  $100,000   over   all   liabilities.      (Attorney   General's   opinion,    February    14, 
1895,  and  March  13,  1895.) 

(3)  The  provision  in  above  Section   149  that  foreign  assessment  companies 
are  subject  only  to  the  provisions  of  this  Act,  means  as  to  admission  into  the 
State   and  does   not   exempt   such   companies   from   taxes   and   other   regulatory 
laws.      (Opinion  of  Attorney  General,  June  27,   1914.) 

Schedule  of  Tees. 

150.  Every  such  company  or  association  shall  pay  to  the  Commis- 
sioner of  Insurance  and  Banking,  for  the  use  of  the  State,  the  follow- 
ing fees:  For  filing  copy  of  its  charter,  twenty-five  dollars;  for  filing 
statement  preliminary  to  admission,  twenty  dollars;  for  filing  each  an- 
nual statement  after  admission,  twenty  dollars;  for  license  to  company 
or  association,  one  dollar.  (E.  S.,  Art.  4792.) 


I  NSI  i;  \\ri-:    LAWS   OF   Ti:x  \s.  55 

Exemptions. 

151.  The  provisions  of  this  chapter  shall  in  nowise  apply  to  mutual 
benefit  organizations  doing  business  in  this  State  through  lodges  or 
councils,  such  as  the  order  of  Chosen  Friends,  Knights  of  Honor,  or 
kindred  organizations.  (R.  S.,  Art.  4793.) 


CHAPTER  VIII. 

MUTUAL   LIFE  INSURANCE  COMPANIES. 

Requisites  for  Obtaining  Charter  and  Certificate  of  Authority  to  Do  Busi- 
ness. 

152.  Nine  or  more  persons,  residents  of  the  State  of  Texas,  may 
form  a  mutual  life  insurance  company  for  the  purpose  of  insuring  the 
lives  of  individuals  on  the  mutual,  level  premium,  legal  reserve  plan, 
subject  to  the  conditions  and  limitations  prescribed  in  this  chapter,  by 
executing  and  acknowledging  before  some  officer  authorized  to  take  ac- 
knowledgments to  conveyances  of  real  estate,  articles  of  incorporation 
for  that  purpose.  Such  articles  shall  set  forth : 

1.  The  name  and  residence  of  each  of  the  incorporate rs. 

2.  The  name   of   the   proposed   company,   which   shall   contain   the 
words,  "Mutual  Life  Insurance  Company,"  as  a  part  thereof,  and  which 
shall  not  be  so  similar  to  that  of  any  other  life  insurance  company  or 
association  now  authorized  to  transact  business  in  this  State  as  to  mis- 
lead the  public. 

3.  The  location  of  the  principal  office  from  which  the  business  of 
the  company  is  to  be  transacted. 

4.  The  number  of  directors  and  the  name  and  place  of  residence  of 
each  of  those  who  are  to  serve  until  the  first  regular  election  of  directors 
as  provided  by  this  chapter.     Such  articles  of  incorporation  shall  be 
filed  with  the  Commissioner  of  Insurance  and  Banking,  who  shall  im- 
mediately submit  them  to  the  Attorney  General  for  his  examination  and 
approval  as  complying  in  all  respects  with  the  law.     If  the  Attorney 
General  approves  them,  he  shall  so  certify  thereon  in  writing,  and  re- 
turn them  to  the  Commissioner  of  Insurance  and  Banking,  who  shall 
file  the  same  in  his  office  and  issue  to  the  coihpany  a  certificate  of  au- 
thority, to  which  shall  be  attached  a  certified  copy  of  the  articles  of 
incorporation,  authorizing  it  to  receive  applications   for  insurance   as 
provided  in  this  chapter,  and  to  collect  premiums  thereon,  and  to  issue 
receipts  therefor;  which  certificate  shall  expressly  state  that  such  com- 
pany is  not  authorized  to  issue  policies  of  insurance  or  transact  any 
business  other  than  that  specifically  authorized  therein  until  it  has  re- 
ceived bona  fide  applications  for  insurance  on  the  lives  of  at  least  two 
hundred    individuals    for    not    less    than    five    hundred    dollars,  each, 
aggregating    at    least    two    hundred    thousand    dollars    of  insurance, 
on  which    the  aggregate  net  premiums   shall  be  equal  to  the   largest 
net    risk    assumed    on    any    one    life,    which    applications    have    been 
approved  by  a  competent  physician  and  on  which  the  first  annual  pre- 
miums at  adequate  rates  have  been  paid  to  the  company,  nor  until  these 
facts  shall  have  been  fully  shown  to  the  Commissioner  of  Insurance  and 
Banking,  and  he  shall  have  issued  to  the  company  a  certificate  of  au- 


56  INSURANCE  LAWS  OF  TEXAS. 

thority  to  transact  business  as  a  mutual  life  insurance  company.     If 
this  showing  is  not  made  within  six  months  after  the  date  upon  which 
such  articles  of  incorporation  are  filed  with  the  Commissioner  of  In-] 
surance  and  Banking,  it  shall  be  his  duty  to  cancel  the  certificate  of] 
authority  of  such  company  to  receive  applications  for  insurance,  and  to  j 
notify  each  incorporator  of  such  action.     When  the   Commissioner  of] 
Insurance  and  Banking  shall  be  notified  that  any  such  company  has 
complied  with  all  the  foregoing  provisions  of  this  article,  he  shall  make, 
or  cause  to  be  made,  at  the  expense  of  such  company,  an  examination 
thereof;  and  if  he  shall  find  that  the  law  has  been  in  all  respects  fully 
complied  with,  it  shall  be  his  duty  to  issue  to  it  a  certificate  of  authority 
to  transact  the  business  of  a  mutual  life  insurance  company,  in  accord- 
ance with  the  terms  of  this  chapter.     (E.  S.,  Art.  4809,  as  amended  by 
Chap.  77,  Acts  37th  Leg.) 

Directors — Officers — Meetings — Voting  Powers  of  Policy-holders. 

153.  The  business  of  a  mutual  life  insurance  company  shall  be  con- 
trolled and  directed  by  a  board  of  directors  consisting  of  not  less  than 
five  nor  more  than  twenty-five  members,  who  shall  be  elected  annually 
as  provided  in  this  chapter,  those  to  serve  until  the  first  annual  election 
to  be  named  in  the  charter,  and  who  shall  hold  office  until  their  suc- 
cessors shall  be  elected  and  qualified,  or  until  they  shall  be  removed 
for  improper  practices.  Such  board  of  directors  shall  elect  the  officers 
of  the  company,  which  shall  be  a  president  and  such  number  of  vice- 
presidents  as  their  by-laws  may  provide ;  a  secretary,  a  treasurer,  a  med- 
ical director  and  such  other  officers  as  the  by-laws  may  provide  for,  and 
shall  fix  the  compensation  of  all  such  officers.  The  duties  of  all  officers 
shall  be  prescribed  by  the  by-laws.  The  by-laws  governing  the  company 
until  the  date  of  its  first  annual  meeting,  as  provided  by  this  chapter, 
shall  be  adopted  by  the  board  of  directors  at  their  first  meeting  after 
the  certificate  of  authority  shall  be  issued  authorizing  the  company  to 
transact  the  business  of  a  mutual  life  insurance  company.  There  shall 
be  an  annual  meeting  of  all  the  policyholders  of  each  mutual  life  insur- 
ance company  at  the  home  office  of  such  company,  or  at  such  other 
place  as  may  be  properly  announced  to  the  policyholders,  on  the  second 
Tuesday  in  March  after  it  shall  have  received  a  certificate  of  authority 
to  transact  the  business  of  life  insurance,  and  annually  thereafter,  at 
which  the  directors  shall  be  elected  for  the  succeeding  year,  and  at  which 
by-laws  for  the  government  of  the  company,  not  inconsistent  with  the 
provisions  of  this  chapter  or  with  the  laws  of  this  State  may  be  adopted, 
and  at  which  the  existing  by-laws  may  be  repealed  or  amended.  At  such 
annual  meeting  every  policyholder  shall  be  entitled  to  one  vote  for  each 
five  hundred  dollars  of  insurance  held  by  him;  and  any  policyholder 
may  execute  his  proxy  authorizing  and  entitling  the  holder  to  exercise 
his  voting  powers,  unless  such  proxy  shall  be  revoked  previous  to  such 
annual  meeting.  The  president,  secretary  and  treasurer  shall  each  give 
bond  for  the  protection  of  the  policyholders  in  amount  and  with  securi- 
ties to  be  approved  by  the  Commissioner  of  Insurance  and  Banking, 
conditioned  for  the  faithful  performance  of  their  respective  duties. 
(E.  S.,  Art.  4810,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 


INSURANCE  LAWS  OP  TEXAS. 


57 


Lvestments  and  Deposits  of  Moneys — Penalty  for  Violation  of  These  Re- 
quirements. 

154.  Mutual  life  insurance  companies  shall  invest  their  funds  in 
>rdance  with  the  provisions  of  Articles  4734  and  4735,  Chapter  2, 

this  title,  concerning  investments  of  life  insurance  companies  in  this 
Jtate;  all  moneys  of  mutual  life  insurance  companies,  coming  into  the 
ids  of  any  officer  or  officers  thereof,  when  not  invested  as  prescribed 
the  above  named  articles,  shall  be  deposited  in  the  name  of  such  com- 
iy  or  companies  in  some  bank  or  banks  which  are  subject  to  either 
Jtate  or  national  regulation  and  supervision,  and  which  have  been 
ipproved  by  the  Commissioner  of  Insurance  and  Banking  as  depos- 
itories therefor.  Any  officer  or  director  of  any  such  company  who  shall 
lowingly  and  wilfully  violate  or  assent  to  the  violation  of  the  pro- 
isions  of  this  section  shall  be  deemed  guilty  of  a  felony,  and  upon  con- 
dction  thereof  shall  be  punished  by  imprisonment  in  the  penitentiary 
for  a  term  of  not  less  than  one  nor  more  than  five  years.  (E.  S.,  Art. 
ill,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 

>mpany  May  Borrow  Money  or  Incur  Debt  Only 'as  Herein  Provided. 

155.  No  mutual  life  insurance  company  shall  have  the  power  except 
provided  in  this  chapter,  to  borrow  money  for  any  purpose  other  than 

e  payment  of  death  losses.  No  such  company  shall  have  the  power 
to  incur  any  debt  or  any  account  except  under  policies  issued  by  it  or 
for  money  borrowed  to  pay  death  losses,  for  which  any  portion  of  its 
its  over  and  above  that  which  may  represent  or  be  derived  from  the 
mse  loading  of  the  premiums  collected  by  it,  shall  in  any  event  be 
ibject  to  execution  upon  a  judgment  therefor.  (R.  S.,  Art.  4812,  as 
icnded  by  Chap.  77,  Acts  37th  Leg.) 

ianner  of  Valuing  Policies. 

156.  The   Commissioner  of  Insurance  and  Banking  shall  annually 
[make  valuations  of  all  outstanding  policies  of  mutual  life  insurance 
companies  as  of  December  31,  of  each  year,  in  accordance  with  the  one 
year  preliminary  term  method  based  upon  the  American  Experience 
Table  of  Mortality  and  3J  per  cent  interest  per  annum,  assuming  an 
average  risk  exposure  of  six  months  on  all  new  policies  issued  within 
each  calendar  year.     (E.  S.,  Art.  4813,  as  amended  by  Chap.  77,  Acts 
37th  Leg.) 

|  Method  of  Computing  Net  Premiums,  Which  Net  Premiums  Shall  Not  Be 
Used  for  Expenses. 

157.  The  net  premiums  upon  all  policies  issued  by  any  such  company 
I  shall  be  computed  in  accordance  with  the  provisions  of  Article  4813, 
this  chapter  and  title,  the  net  premiums  on  all  new  policies  issued  to  be 
obtained  by  deducting  from  the  total  premium  paid  the  amount  of 
the  premium  in  their  return  premium  as  above  provided  and  allow- 

|ing  the  remainder  of  the  first  annual  premium  as  expense  loading; 
I  no  portion  of  such  net  premium  collected  upon  any  such  policy  shall 
lever  be  used  or  applied  for  the  payment  of  any  expenses  of  the  company 
of  any  kind  or  character,  or  for  any  other  purpose  than  the  payment  of 
death  losses,  surrender  values,  or  lawful  dividends  to  policyholders,  loans 
on  policies,  or  for  the  purposes  of  such  investments  of  the  company  as 


58  INSURANCE  LAWS  OF  TEXAS. 

are  prescribed  in  the  laws  of  this  State.     (E.  S.,  Art.  4814,  as  amended 
by  Chap.  77,  Acts  37th  Leg.) 

Company  May  Maintain  a  Contingency  Reserve  in  Excess  of  Net  Value 
of  Its  Policies. 

158.  Every  mutual  life  insurance  company  may  maintain  and  set 
aside,  before  declaring  any  dividends  to  policy  holders,  in  addition  to  an 
amount  equal  to  the  net  value  of  all  its  policies,  computed  as  required 
by  this  chapter,  a  contingency  reserve  not  exceeding  the  following  re- 
spective percentages  of  said  net  values,  towit:     When  said  net  values 
are  less  than  one  hundred  thousand  dollars,  20  per  centum  thereof,  or 
the  sum  of  ten  thousand  dollars,  whichever  is  the  greater,  the  percentage 
thereof  measuring  the  contingency  reserve  shall  decrease  one-half  of  one 
per  cent  for  each  one  hundred  thousand  dollars  of  said  net  values  up  to 
one  million  dollars,  and  thereafter,  one-half  of  one  per  cent  for  each 
additional  one  million  dollars  of  said  net  values;  provided,  that  as  the 
said  net  values  of  said  policies  increase,  and  as  the  maximum  percentage 
measuring  the  contingency  reserve  decrease,  such  company  may  main- 
tain the  contingency  reserve  already  accumulated  hereunder,  although 
for  the  time  being  it  may  exceed  the  maximum  percentage  herein  pre- 
scribed, but  may  not  add  to  the  contingency  reserve  when  the  addition 
will  bring  it  beyond  the  maximum  percentage.     (R.  S.,  Art.  4815,  as 
amended  by  Chap.  77,  Acts  37th  Leg.) 

Company  May  Declare  Dividends  to  Policyholders  on  Approval  of  Com- 
missioner. 

159.  Every   mutual   life   insurance   company   organized   under   this 
chapter  shall  make  an  annual  accounting  and  apportionment  of  divisible 
surplus  to  each  policyholder,  beginning  not  later  than  the  end  of  the 
second  policy  year  on  all  policies  issued ;  and  each  such  policyholder  shall 
be  entitled  to  and  credited  with  or  paid  such  a  portion  of  the  entire 
divisible  surplus  as  has  been  contributed  thereto  by  his  policy.     Upon 
the  thirty-first  day  of  December  of  each  year,  or  as  soon  thereafter  as 
may  be  practicable,  every  such  company  shall  well  and  truly  ascertain 
the  surplus  earned  by  it  during  such  year;  and,  after  setting  aside  from 
such  surplus  the  contingency  reserve  provided  in  this  chapter,  it  shall 
apportion  to  each  of  its  policies  upon  which  all  premiums  due  and  pay- 
able for  at  least  one  year  have  been  paid,  the  proportion  of  the  remainder 
of  such  surplus  which  has  been  contributed  by  each  such  policy,  and 
shall  immediately  submit  a  detailed  report  of  such  apportionment  under 
oath  of  its  president  or  secretary  to  the  Commissioner  of  Insurance  and 
Banking.     If  such  Commissioner  shall  find  such  apportionment  to  be 
equitable  and  just  to  the  policyholders  and  to  be  in  accordance  with 
the  provisions  of  this  chapter,  he  shall  approve  the  same,  and  it  shall 
become  effective;  and,  if  he  shall  not  approve  such  apportionment,  he 
shall  make  such  changes  therein  as  he  shall  deem  equitable  and  just  and 
necessary  to  make  the  same  comply  with  the  provisions  of  this  chapter, 
and  shall  certify  such  changes  to  such  company,  whereupon  such  appor- 
tionment as  changed  by  the  Commissioner  shall  become  effective.     Each 
dividend  declared  as  aforesaid  shall  be  paid  in  cash,  or  in  the  equivalent 
of  its  cash  value  in  any  option  stated  in  the  policy  and  selected  by  the 
policyholder,  notice  of  which  selection  by  the  policyholder  shall  be  given 


INSURANCE  LAWS  OF  TEXAS.  50 

to  the  company  in  writing.     (R.  S.,  Art.  4816,  as  amended  by  Chap.  77, 
Acts  37th  Leg.) 

Company  May  Bo  Business  in  Texas  and  Other  States — Must  Have  Its 
Policy  Forms  Approved  by  the  Commissioner — Cannot  Issue  Policies 
in  Excess  of  Five  Thousand  Dollars  Until  Its  Insurance  in  Force  Is 
Ten  Million  Dollars. 

160.  Mutual   life   insurance   companies   are   authorized   to   transact 
business  throughout  the  State  of  Texas,  and  in  other  States  to  which 
they  may  be  admitted;  they  shall  issue  no  policies  except  upon  the  par- 
ticipating plan  with  dividends  payable  annually  as  elsewhere  provided 
in  this  chapter;  the  forms  of  all  policies  issued  by  any  such  company 
shall  be  approved  by  the  Commissioner  of  Insurance  and  Banking,  and 
all  such  policies  shall  have  plainly  written  on  both  the  face  and  the  re- 
verse sides  thereof  the  words,  "The  form  of  this  policy  is  approved  by  the 
Commissioner  of  Insurance  and  Banking  of  the  State  of  Texas";  and 
it  shall  be  the  duty  of  the  Commissioner  to  revoke  the  certificate  of  au- 
thority of  any  company  which  shall  issue  any  policy  except  upon  such 
form  so  approved.     No  such  company  shall  issue  any  policy  or  policies 
by  which,  after  deducting  reinsurance,  if  any,  it  shall  be  bound  for  more 
than  five  thousand  dollars  upon  any  one  life  at  any  time  when  the  total 
amount  of  its  insurance  in  force  is  less  than  ten  million  dollars.     (R.  S., 
Art.  4817,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 

Medical  Examinations  Are  Required. 

161.  No  mutual  life  insurance  company  shall  enter  into  any  contract 
of  insurance  amounting  to  $500  or  more,  upon  the  life  of  any  person, 
without  having  previously  made  a  medical  examination,  prescribed  by 
its  medical  director  and  approved  by  its  board  of  directors,  of  the  in- 
sured, by  a  duly  qualified  and  licensed  practitioner,  and  without  his  cer- 
tificate that  the  insured  was  in  sound  health  at  the  date  of  examination. 
Any  officer  or  agent  or  employe  of  such  company  violating  the  provi- 
sions of  this  section  or  effecting  or  attempting  to  effect  a  contract  of 
insurance  contrary  to  the  provisions  hereof  shall  be  deemed  guilty  of 
a  misdemeanor,  and  shall  be  punished  by  a  fine  of  not  less  than  one  hun- 
dred nor  more  than  five  hundred  dollars  or  by  imprisonment  in  the 
county  jail  for  not  less  than  six  months  or  by  both  such  fine  and  im- 
prisonment.    (R.  S.,  Art.  4818,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 

No  Deductions  Shall  Be  Made  on  Policies  Where  Premiums  Are  Paid  at 
Periods  Less  Than  Annual. 

162.  The  policies  issued  by  a  mutual  life  insurance  company  shall 
provide,  in  the  event  that  premiums  are  payable  other  than  annually, 
that  no  deduction  shall  be  made  from  the  amount  due  on  any  policy  in 
the  event  that  the  death  of  the  policyholder  shall  occur  prior  to  the  due 
date  of  any  premium  less  than  annual.     (R.  S.,  Art.  4819,  as  amended 
by  Chap.  77,  Acts  37th  Leg.) 

Policies  Shall  Contain  Table  of  Guaranteed  Values. 

163.  Each  policy  issued  by  a  mutual  life  insurance  company  shall 
contain  a  table  of  guaranteed  values,  which  shall  become  iioii-forfei table 
not  later  than  upon  the  payment  of  the  third  full  annual  premium;  such 


60  INSURANCE  LAWS  OF  TEXAS. 

tables  of  values  shall  be  drawn  in  accordance  with  the  provisions  of 
Article  4741,  Chapter  2,  of  this  title.  (E.  S.,  Art.  4820,  as  amended  by 
Chap.  77,  Acts  37th  Leg.) 

Company  Shall  File  Animal  Statement  and  Obtain  Certificate  of  Authority. 

164.  Mutual  life  insurance  companies  organized  under  the  provisions 
of  this  chapter  shall  file  their  annual  statements  with  the  Commissioner 
of  Insurance  and  Banking,  and  receive  from  him  their  certificates  of 
authority  to  transact  the  business  of  life  insurance,  in  accordance  with 
the  provisions  of  Articles  4729  and  4730,  Chapter  2,  of  this  title.     (E.  S., 
Art.  4821,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 

Company's  Agents  Must  Be  Licensed — Commissions  of  Agents  Shall  Not 
Be  in  Excess  of  Expense  Loading. 

165.  Any  mutual  life  insurance  company  organized  under  the  pro- 
visions of  this  chapter,  having  received  authority  from  the  Commissioner 
of  Insurance  and  Banking  to  transact  business  in  this  State  shall  receive 
from  such  Commissioner,  upon  written  request  therefor,  a  certificate  of 
authority  for  each  of  its  agents  in  this  State.     Contracts  between  such 
companies  and  such  agents  shall  not  provide  for  commissions  or  other 
compensation  to  such  agents  in  excess  of  the  expense  loading  in  the  pre- 
miums of  policies  issued  upon  the  applications  procured  by  such  agents, 
collected  therefor,  and  paid  to  the  company  in  cash.    (E.  S.,  Art.  4822,  as 
amended  by  Chap.  77,  Acts  37th  Leg.) 

Company  Is  Required  to  Be  Examined. 

166.  It  shall  be  the  duty  of  the  Commissioner  of  Insurance  and  Bank- 
ing to  have  made,  once  in  each  calendar  year,  a  thorough  and  full  exam- 
ination of  the  affairs  of  each  mutual  life  insurance  company,  the  report 
of  which  examination  shall  be  made  to  such  Commissioner  under  oath ; 
and  it  shall  be  the  duty  of  the  Commissioner  of  Insurance  and  Banking, 
if  he  shall  approve  the  report  of  such  examination,  to  furnish  the  com- 
pany with  certificate  of  approval.     The  expense  of  each  such  examination 
shall  be  borne  by  the  company  examined.     (E.  S.,  Art.  4823,  as  amended 
by  Chap.  77,  Acts  37th  Leg.) 

Officers,  Directors  or  Policyholders  May  Advance  Money  for  Promotion, 
But  No  Commissions  for  promotion  Shall  Be  Permitted — Receiver  May 
Be  Appointed. 

167.  Any  officer,  director,  or  policyholder  of  a  mutual  life  insurance 
company,  or  any  other  person,  may  advance  to  such  company  any  sum 
or  sums  of  money  for  the  purpose  of  promoting  or  conserving  its  busi- 
ness, or  to  enable  it  to  comply  with  any  requirements  of  the  law;  and 
such  money,  together  with  such  interest  thereon  as  may  have  been  agreed 
upon,  not  exceeding  10  per  cent  per  annum,  shall  be  payable  only  out 
of  the  surplus  remaining  after  providing  for  all  reserves  and  other  liabili- 
ties, and  shall  not  otherwise  be  a  liability  or  claim  against  the  company 
or  any  of  its  assets.     No  commission  or  promotion  expenses  shall  be  paid 
in  connection  with  the  advance  of  any  such  money  to  the  company,  and 
the  amount  of  such  advance  shall  be  reported  in  each  annual  statement 
as  provided  in  Article  4821,  this  chapter  and  title.     At  any  time  when 
the  liabilities  of  any  such  company,  computing  its  reserve  liability  upon 


INSURANCE  LAWS  OF  TEXAS.  61 

the  American  Experience  Table  of  Mortality  and  3£  per  cent  per  annum 
interest,  shall  be  in  excess  of  its  assets,  the  company  shall  cease  the  issu- 
ance of  new  policies  until  the  impairment  in  its  reserve  shall  be  made 
good.  Whenever  the  liabilities  of  any  such  company,  computing  its  re- 
serve liability  upon  the  American  Experience  Table  of  Mortality  and 
4J  per  cent  interest  per  annum,  exceed  its  assets,  the  Commissioner  of 
Insurance  and  Banking  may  request  the  Attorney  General  to  file  suit 
in  the  name  of  the  State  in  the  district  court  of  the  county  in  which 
such  company  is  located  for  the  appointment  of  a  receiver  to  terminate 
and  liquidate  the  affairs  of  the  company,  and  such  action  may  be  main- 
tained. In  any  such  action  such  district  court,  or  judge  thereof,  in 
vacation,  shall  have  the  power,  if  in  his  opinion  the  interests  of  the 
policyholders  of  the  company  require  it,  to  enter  an  order  for  the  re- 
insurance of  all  outstanding  risks  of  such  company  in  some  other  life 
insurance  company  authorized  to  do  business  in  this  State  upon  such 
terms  and  conditions  as  may  be  approved  by  the  Commissioner  of  In- 
surance and  Banking,  and  by  such  court,  or  the  judge  thereof,  in  vaca- 
tion; and  such  court  or  judge  may  for  that  purpose  direct  the  convey- 
ance of  the  entire  assets  of  any  such  company,  or  any  portion  thereof, 
to  such  reinsuring  company  in  consideration  of  such  reinsurance.  (R.  S., 
Art.  4824,  as  amended  by  Chap.  77,  Acts  37th  Leg.) 

For  Taxation  Purposes  the  Reserve  of  the  Company  Shall  Be  Treated  as 
Debts  Due  to  Policyholders. 

168.  For  the  purposes  of  State,  county  and  city  taxation,  the  amount 
of  the  reserve  and  contingency  reserve  of  all  mutual  life  insurance  com- 
panies shall  be  treated  as  debts  due  by  them  to  their  policyholders;  and 
the  total  value  of  their  property  for  such  purposes  shall  be  ascertained 
by  deducting  from  the  total  amount  of  their  gross  assets  the  amount  of 
such  reserves  and  contingency  reserves.     (R.  S.,  Art.  4825,  as  amended 
by  Chap.  77,  Acts  37th  Leg.) 

Articles  4724  to  4774,  Inclusive,  Revised  Statutes  of  Texas,  and  All  Laws 
in  Conflict  With  This  Chapter  Are  Repealed. 

169.  The  provisions  of  Articles  4724  to  4774,  inclusive,  in  Chapter  2 
of  this  title,  when  not  in  conflict  with  the  several  articles  of  this  chap- 
ter, shall  likewise  apply  to  and  govern  mutual  life  insurance  companies 
organized  under  the  provisions  of  this  chapter.     All  laws  and  parts  of 
laws  in  conflict  with  this  act  are  hereby  repealed;  provided,  that  such 
repeals  and  the  provisions  of  this  act  shall  not  apply  to  or  affect  any 
company  or  association  now  organized  and  doing  business  under  the 
laws  of  this  State.    (R.  S.,  Art.  4826,  as  amended  by  Chap.  77,  Acts  37th 
Leg.) 


CHAPTER  IX. 

FIKE  AND  MARINE  COMPANIES. 
May  Do  What. 

170.  It  shall  be  lawful  for  any  insurance  company  doing  business 
in  this  State  under  the  proper  certificate  of  authority,  except  a  life 
or  health  insurance  company  to  insure  houses,  buildings  and  all  other 


62  INSURANCE  LAWS  OF  TEXAS. 

kinds  of  property  against  loss  or  damage  by  fire,  and  to  take  all  kinds 
of  insurance  on  goods,  merchandise  or  other  property  in  the  course  of 
transportation,  whether  on  land  or  water,  or  any  vessel'  afloat,  wher- 
ever the  same  may  be;  to  lend  money  on  bottomry  or  respondentia;  and 
to  cause  itself  to  be  insured  against  any  loss  or  risk  it  may  have  incurred 
in  the  course  of  its  business  and  upon  the  interest  which  it  may  liave  in 
any  property  by  means  of  any  loan  or  loans  which  it  may  have  made  on 
bottomry  or  respondentia;  and  generally  to  do  and  perform  all  other 
matters  and  things  proper  to  promote  these  objects;  to  insure  automo- 
biles or  other  motor  vehicles,  whether  stationary  or  being  operated  under 
their  own  power,  against  all  or  any  of  the  risks  of  fire,  lightning,  wind 
storms,  hail  storms,  tornadoes,  cyclones,  explosions,  transportation  by 
land  or  water,  theft  and  collisions  upon  filing  with  the  Commissioner  of 
Insurance  and  Banking  of  the  State,  notification  of  their  purpose  to 
do  so.  (Acts  Thirty-third  Legislature,  Chapter  108,  Section  1.) 

Note. —  (1)  The  notification  of  the  company's  purpose  to  engage  in  any  par- 
ticular kind  of  insurance  must  be  in  the  form  of  an  amendment  to  its  charter. 
(Opinion  of  Attorney  General,  June  27,  1913.) 

(2)  A  mutual  fire  insurance  company,  organized  under  the  laws  governing 
mutual  fire  insurance  companies,  cannot  amend  its  charter  so  as  to  authorize 
it  to  do  any  other  kinds  of  insurance  than  such  as  are  mentioned  in  said  law 
governing  mutual  fire  insurance  companies,  and  cannot  therefore  avail  itself  of 
the  provisions  of  Chapter  108,  Acts  of  the  Thirty-third  Legislature,  which  refers 
only  to  capital  stock  companies,  and  not  to  mutual  companies.  (Opinion  of 
Attorney  General,  August  8,  1914.) 

Capital  Stock  May  Be  Reduced,  When. 

171.  Whenever  the  joint  stock  of  any  fire,  fire  and  marine,  or  marine 
insurance  company  of  this  State  becomes  impaired,  the  Commissioner 
of  Insurance  and  Banking  may,  in  his  discretion,  permit  the  said  com- 
pany to  reduce  its  capital  stock  and  par  value  of  its  shares  in  proportion 
to  the  extent  of  impairment,  but  in  fixing  such  reduced  capital  no  sum 
exceeding  twenty-five  thousand  dollars  shall  be  deducted  from  the  assets 
and  property  on  hand,  which  shall  be  retained  as  surplus  assets,  and  no 
part  of  such  assets  and  property  shall  be  distributed  to  the  stockholders, 
nor  shall  the  capital  stock  of  a  company  in  any  case  be  reduced  to  an 
amount  less  than  one  hundred  thousand  dollars.     (E.  S.,  Art.  4863.) 

Company  Must  Make  Good  Its  Whole  Capital  Stock. 

172.  Any  fire,  marine  or  inland  insurance  company  having  received 
notice  from  the  Commissioner  of  Insurance  and  Banking,  to  make  good 
its  whole  capital  stock  within  sixty  days,  shall  forthwith  call  upon  its 
stockholders  for  such  amounts  as  shall  make  its  capital  equal  to  the 
amount  fixed  by  the  charter  of  such  company.     (E.  S.,  Art.  4864.) 

What  Course  Shall  Be  Taken  When  Stockholder  Fails  to  Pay. 

173.  In  case  any  stockholder  of  such  fire,  marine  or  inland  insurance 
company  shall  neglect  or  refuse  to  pay  the  amount  so  called  for,  after 
notice  personally  given,  or  by  advertisement  for  such  time  and  in  such 
manner  as  said  Commissioner  shall  approve,  it  shall  be  lawful  for  said 
company  to  require  the  return  of  the  original  certificate  of  stock  held 
by  such  stockholder,  and  in  lieu  thereof  to  issue  new  certificates  for  such 


INSURANCE  LAWS  OF  TEXAS.  G,3 

number  of  shares  as  such  defaulting  stockholders  may  be  entitled  to,  in 
the  proportion  that  the  ascertained  value  of  the  funds  of  said  company 
may  be  found  to  bear  to  the  original  capital  of  said  company ;  the  value 
of  such  shares,  for  which  new  certificates  are  issued,  to  be  ascertained 
under  the  direction  of  said  Commissioner,  and  the  company  shall  pay 
for  the  fractional  part  of  shares.  (R.  S.,  Art.  4865.) 

Company  May  Create  and  Dispose  of  New  Stock. 

174.  It  shall  be  lawful  for  such  fire,  marine  or  inland  insurance 
company  to  create  new  stock  and  dispose  of  the  same,  and  to  issue  new 
certificates  therefor  to  any  amounts  sufficient  to  make  up  the  original 
capital  of  the  company.     (R.  S.,  Art.  4866.) 

Texas  Companies — When  Insurance  Companies  Organized  Under  the  Laws 
of  the  State  Shall  Purchase  or  Hold  Real  Estate. 

175.  No  fire,  marine  or  inland  insurance  company  organized  under 
the  laws  of  the  State  shall  purchase  or  hold  any  real  estate  except — 

(1)  Such  as  shall  be  requisite  for  its  convenient  accommodation  in 
the  transaction  of  its  business. 

(2)  Such  as  shall  have  been  mortgaged  to  it  in  good  faith  by  way 
of  security  for  loans  previously  contracted  or  for  money  due. 

(3)  Such  as  shall  have  been  conveyed  to  it  in  satisfaction  of  debts 
previously  contracted  in  the  legitimate  business  of  the  company  or  for 
money  due. 

(4)  Such  as  shall  have  been  purchased  at  sales  under  judgments, 
decrees  or  mortgages,  obtained  or  made  for  such  debts.     All  lands  pur- 
chased or  held  in  violation  of  this  article  shall  be  forfeited  to  the  State. 
(R.  S.,  Art.  4869.) 

Shall  File  Bond. 

176.  Every  fire  insurance  company  not  organized   under  the  laws 
of  this   State  applying  for  a  certificate  of  authority  to  transact   any 
kind  of  insurance  in  this  State  shall,  before  obtaining  such  certificate, 
file  with  the  Commissioner  of  Insurance  and  Banking,  a  bond,  with 
good  and  sufficient  surety  or  sureties  to  be  approved  by  the  Commis- 
sioner of  Insurance  and  Banking,  payable  to  the  Commissioner  of  In- 
surance and  Banking,  and  his  successors  in  office,  in  a  sum  equal  to  25 
per  cent  of  its  premiums  collected  from  citizens  or  upon  property  in 
this  State  during  the  preceding  calendar  year,  as  shown  by  its  annual 
reports  for  such  year;  provided,  however,  the  bond  in  no  case  shall  ex- 
ceed fifty  thousand  dollars,  nor  be  less  than  ten  thousand  dollars,  con- 
ditioned that  said  company  will  pay  all  its  lawful  obligations  to  citizens 
of  this  State.     Such  bonds  shall  be  subject  to  successive  suits  by  citi- 
zens of  this  State  so  long  as  any  part  of  the  same  shall  not  be  exhausted 
and  the  same  shall  be  kept  in  force  unimpaired  until  all  claims  of  citi- 
zens of  this  State  arising  out  of  obligations  of  said  company  have  been 
fully  satisfied.     (R.  S.,  Art.  4870.) 

Note. —  ( 1 )      Bond  cannot  be  canceled  nor  can  Commissioner  furnish  evidence 
of  cancellation.      (Opinion  of  Attorney  General,  December  29,   1909.) 

(2)  Companies  doing  only  a  marine  business  are  not  required  to  give  bond. 
(Opinion  of  Attorney  General,  July  23.  1910.) 

(3)  Bond   is  based  upon,   and   in  amount  must  be  one-fourth   of   the  gross 


64  INSURANCE  LAWS  OF  TEXAS. 

premium  receipts  of  the  company  for  the  preceding  year,  and  such  gross  pre- 
mium receipts  are  defined  to  be  the  premium  receipts  reported  to  the  Commis- 
sioner in  the  annual  statement  of  the  company  less  returned  premiums  and 
reinsurance  in  authorized  companies.  (Opinion  of  Attorney  General,  March  19, 
1912.) 

(4)  Insuring  automobiles  against  fire  is  fire  insurance  and  a  company  writ- 
ing such  insurance  is  subject  to  the  laws  governing  fire  insurance,  and  if  a 
foreign  company,  it  must  give  the  bond  required  of  foreign  fire  insurance  com- 
panies. (Opinion  of  Attorney  General,  March  14,  1914.) 

Bond  Shall  Provide. 

177.  Such  bonds  shall  provide  that  in  the  event  the  company  shall 
become  insolvent,  or  cease  to  transact  business  in  this   State  at  any 
time  when  it  has  outstanding  policies  of  insurance  in  favor  of  citizens 
of  this   State,  or  upon  property  in  this  State,  the   Commissioner  of 
Insurance  and  Banking  shall  have  the  power,  after  having  given  ten 
days'  notice  to  the  officers  of  such  company  or  any  receiver  in  charge  of 
its  property  and  affairs,  to  contract  with  any  other  insurance  company 
transacting  business  in  this  State  for  the  assumption  and  reinsurance 
by  it  of  all  the  insurance  risks  outstanding  in  this  State  of  such  com- 
pany which  is  insolvent  or  which  has  ceased  to  transact  business  in  this 
State,  which  contract  shall  also  provide  for  the  assumption  of  such  re- 
insuring company  of  all  outstanding  and  unsatisfied  lawful  claims  then 
outstanding  against  such  company  which  has  become,  insolvent  or  ceased 
to  transact  business  in  this  State,  and  in  the  event  of  the  Commissioner 
making  any  such  contract,  and  if  the  same  shall  be  approved  as  reason- 
able by  the  Attorney  General  and  the  Governor  of  this  State  the  re- 
insuring company  shall  be  entitled  to  recover  from  the  makers  of  such 
bond  the  amount  of  the  premium  or  compensation  so  agreed  upon  for 
such  reinsurance.     (E.  S.,  Art.  4870.) 

May  Deposit  Securities  in  Lieu  of  Bond. 

178.  Any  company  desiring  to  do  so  may  at  its  option  in  lieu  of 
giving  the  bond  required  by  this  section  deposit  securities  of  any  kind 
in  which  it  may  lawfully  invest  its  funds  with  the  State  Treasurer  of 
this  State  upon  such  terms  and  conditions  as  will  in  all  respects  afford 
the  same  protection  and  indemnity  as  is  herein  provided  for  to  be  af- 
forded by  said  bond.     (E.  S.,  Art.  4870.) 

Note. — A  company  having  deposit  instead  of  bond  may  withdraw  deposit  by 
first  protecting  all  its  policyholders  by  reinsurance.  (Attorney  General's  opin- 
ion, March  14,  1911.) 

Shall  Pile  Bond. 

179.  Every  fire  insurance  company  not  organized  under  the  laws  of 
this  State,  hereafter  issuing  or  causing  or  authorizing  to  be  issued  any 
policy  of  insurance  other  than  life  insurance,  shall  first  have  filed  with 
the  Commissioner  of  Insurance  and  Banking  during  the  calendar  year 
in  which  such  policy  may  issue  or  authorize  or  cause  to  be  issued  a 
bond  of  good  and  sufficient  sureties  to  be  approved  by  such  Commis- 
sioner in  a  sum  not  less  than  ten  thousand  dollars,  conditioned  for 
the  payment  of  all  lawful  obligations  to  citizens  of  this  State  arising 
out  of  any  policies  or  contracts  issued  by  such  fire  insurance  company; 
which  such  bond  shall  be  subject  to  successive  suits  by  citizens  of  this 


INSURANCE  LAWS  OF  TEXAS.  65 

State  so  long  as  any  part  of  the  same  shall  not  be  adjusted  and  so  long 
as  there  remains  outstanding  any  such  obligations  or  contracts  of  such 
fire  insurance  company.  This  article  shall  not  apply  to  any  person,  firm 
or  corporation  or  association  doing  an  inter-insurance,  co-operative  or 
reciprocal  business.  (R.  S.,  Art.  4871.) 

Annual  Statement  Required  of  Fire,  Marine  and  Inland  Companies. 

180.  It  shall  be  the  duty  of  the  president  or  of  the  vice-president 
and  secretary,  of  each  fire,  marine  or  inland  insurance  company  doing 
business  in  this  State,  annually,  on  the  first  day  of  January  of  each 
year,  or  within  sixty  days  thereafter,  to  prepare  under  oath  and  deposit 
with  the  Commissioner  of  Insurance  and  Banking  of  this  State,  a  full, 
true  and  complete  statement  of  the  condition  of  such  company  on  the 
last  day  of  the  month  of  December  preceding.     (R.  S.,  Art.  4872.) 

What  the  Statement  Shall  Show. 

181.  The  annual  statement  required  by  the  preceding  article  shall 
exhibit  the  following  items  and  facts : 

(1)  The  name  of  the  company  and  where  located. 

(2)  The  names  and  residences  of  the  officers. 

(3)  The  amount  of  capital  stock  of  the  company. 

(4)  The  amount  of  capital  stock  paid  up. 

(5)  The  property  or  assets  held  by  the  company,  viz.:     The  real 
estate  owned  by  such  company,  its  location,  description  and  value  as 
near  as  may  be;  and  if  said  company  be  one  organized  under  the  laws 
of  this  State,  shall  accompany  such  statement  with  an  abstract  of  title 
to  the  same;  the  amount  of  cash  on  hand  and  deposited  in  banks  to  the 
credit  of  the  company  and  in  what  bank  or  banks  the  same  is  deposited ; 
the  amount  of  cash  in  the  hands  of  agents,  naming  such  agents;  the 
amount  of  cash  in  course  of  transmission;  the  amount  of  loans  secured 
by  first  mortgages  on  real  estate,  with  the  rate  of  interest  thereon, 
specifying  the  location  of  such  real  estate,  its  value  and  the  name  of  the 
mortgagor;  the  amount  of  all  bonds  and  other  loans,  with  the  rate  of 
interest  thereon  and  how  secured;  the  amount  due  the  company  in 
which  judgments  have  been  obtained;  describing  such  judgments;  the 
amount  of  stocks  in  this  State,  of  the  United  States,  or  any  incorporated 
city  of  this  State,  and  of  any  other  stock  owned  by  the  company,  de- 
scribing the  same  and  specifying  the  amount  and  number  of  shares,  and 
the  par  and  market  value  of  each  kind  of  stock;  the  amount  of  stock 
held  by  'such  company  as  collateral  security  for  loans,  with   amount 
loaned  on  each  kind  of  stock,  its  par  and  market  value;  the  amount  of 
interest  actually  due  to  the  company  and  unpaid;  all  other  securities, 
their  description  and  value. 

(6)  The  liabilities  of  such  company,  specifying  the  losses  adjusted 
and  due;  losses  adjusted  and  not  due;  losses  unadjusted;  losses  in  sus- 
pense, and  the  causes  thereof ;  losses  resisted  and  in  litigation ;  dividend, 
either  in  scrip  or  cash,  specifying  the  amount  of  each  declared,  but  not 
due;  dividends  declared  and  due;  the  amount  required  to  reinsure  all 
outstanding  risks  on  the  basis  of  40  per  cent  of  the  premium  on  all 
unexpired  fire  risks,  and  100  per  cent  of  the  premiums  on  all  unexpired 
marine  and  inland  transportation  risks;  the  amount  due  banks  or  other 


66  .     INSURANCE  LAWS  OF  TEXAS. 

creditors,  naming  such  banks  or  other  creditors,  and  the  amount  due 
to  each,  the  amount  of  money  borrowed  by  the  company,  of  whom  bor- 
rowed, the  rate  of  interest  thereon,  and  how  secured;  all  other  claims 
against  the  company,  describing  the  same. 

(7)  The  income  of  the  company  during  the  preceding  year,  stating 
the  amount  received  for  premiums,  specifying  separately  fire,  marine 
and  inland  transportation  premiums,  deducting  reinsurance ;  the  amount 
received  for  interest,  and  from  all  other  sources. 

(8)  The   expenditures   during  the   preceding  year,   specifying  the 
amount  of  losses  paid  during  said  term,  stating  how  much  of  same 
accrued  prior  and  how  much  subsequent  to  the  date  of  the  preceding 
statement,  and  the  amount  at  which  losses  were  estimated  in  such  pre- 
ceding statement;  the  amount  paid  for  dividends;  the  amount  paid  for 
return  premiums,  commissions,  salaries,  expenses  and  other  charges  of 
officers,  agents,  clerks  and  other  employes;  the  amount  paid  for  local, 
State,  national,  internal  revenue  and  other  taxes  and  duties ;  the  amount 
paid  for  all  other  expenses,  such  as  fees,  printing,  stationery,  rents, 
furniture,  etc. 

(9)     The  largest  amount  insured  in  any  one  risk,  naming  the  risk. 

(10)  The  amount  of  risks  written  during  the  year  then  ending. 

(11)  The  amount  of  risks  in  force  having  less  than  one  year  to  run. 

(12)  The  amount  of  risks  in  force  having  more  than  one  and  not 
over  three  years  to  run. 

(13)  The  amount  of  risks  having  more  than  three  years  to  run. 

(14)  It  shall  be  stated  whether  or  not  dividends  are  declared  on 
premiums  received  for  risks  not  terminated.     (E.  S.,  Art.  4873.) 

Limit  to  Extent  of  Insurance. 

182.  (1)  No  fire,  fire  and  marine,  marine  or  inland  insurance 
company  doing  business  in  this  State  shall  expose  itself  to  any  one 
risk,  except  when  insuring  cotton  in  bales  and  grain,  to  an  amount 
exceeding  10  per  cent  of  its  paid  up  capital  stock,  unless  the  excess 
shall  be  insured  by  such  company  in  some  other  solvent  insurance  com- 
pany legally  authorized  to  do  business  in  this  State. 

Note. —  (1)  The  term  "one  risk"  means  one  building,  irrespective  of  its  mode 
of  construction;  one  building  cannot  be  divided  into  a  number  of  risks  upon  the 
theory  that  each  room  is  a  separate  risk  because  it  is  fireproof.  (Opinion  of 
Attorney  General,  August  17,  1910.) 

(2)  Casualty,  surety,  fidelity  and  guaranty  companies  cannot  issue  a  policy 
or  bond  in  excess  of  10  per  cent  of  their  capital  without  reinsuring  the  excess. 
(Opinion  of  Attorney  General,  May  7,  1915.) 

(3)  Limiting  the  amount  of  insurance  which   an  insurance   company  may 
write  in  any  one  risk,  and  requiring  surplus  lines  to  be  insured  in  authorized 
companies,  has  no  application  to  surety  companies.      (Opinion  of  Attorney  Gen- 
eral, January  7,  1918.) 

Reinsurance  Must  Be  Placed  in  Licensed  Companies. 

(2)  Every  fire,  fire  and  marine,  marine  or  inland  insurance  com- 
pany doing  business  in  this  State  may  reinsure  the  whole  or  any  part 
of  any  policy  obligation  in  any  other  insurance  company  legally  au- 
thorized to  do  business  in  this  State.  The  Commissioner  of  Insurance 
and  Banking  shall  require  every  year,  from  every  insurance  company 


INSURANCE  LAWS  OF  TEXAS.  67 

doing  business  in  this  State,  a  certificate,  sworn  to  before  an  officer 
legally  qualified  to  administer  oaths  in  the  State  of  Texas,  to  the  effect 
that  no  part  of  the  business  written  by  such  company  in  this  State 
has  been  reinsured  in  whole  or  in  part  by  any  company,  corporation, 
association  or  society  not  authorized  to  do  business  in  this  State. 
Every  insurance  company  doing  business  shall  also  furnish  the  Com- 
missioner of  Insurance  and  Banking  with  a  list  of  all  reinsurances 
during  the  year  in  authorized  companies,  showing  the  name,  amount 
and  premium  effected  in  each  company. 

Note. —  (1)  Reinsurance,  including  cotton  and  grain  risks,  must  be  placed  in 
companies  licensed  by  Texas  Insurance  Department,  and  the  fact  that  licensed 
companies  will  not  accept  reinsurance  at  terms  and  rates  obtainable  elsewhere 
will  not  authorize  reinsuring  with  unlicensed  companies  or  associations.  (Opin- 
ion of  Attorney  General,  October  4,  1911.) 

(2)  A  general  complaint,  made  under  oath,  charging  that  certain  insurance 
companies  licensed  to  do  business  in  Texas,  have  violated  the  law  requiring  all 
reinsurance  of  Texas  business  to  be  placed  with   companies  authorized  to   do 
business  in  Texas,  although  not  specifying  the  times,  places  and  circumstances 
of  such  violation  of  law  is  sufficient  to  require  the  Commissioner  to  make  an 
investigation  of  such  charges.     (Opinion  of  Attorney  General,  March  9,  1914.) 

Violation  of  Law — Bevocation  of  License. 

(3)  Any  insurance  company  authorized  to  transact  the  business  of 
fire,  fire  and  marine,  marine  and  inland  insurance  in  this  State  failing 
to  comply  with  the  provisions  of  this  article  shall  forfeit  its  authority  to 
do  such  business  for  a  period  of  one  year,  and  it  is  hereby  made  the 
duty  of  the  Commissioner  of  Insurance  and  Banking  to  investigate 
any  complaint  as  to  violation  of  said  act,  and  upon  satisfactory  proof 
that  any  company  authorized  to  transact  the  business  of  fire,  fire  and 
marine,  marine  or  inland  insurance  in  this  State  has  violated  the  pro- 
visions of  this  act,  the  said  Commissioner  shall  revoke  the  certificate  of 
authority  of  the  offending  company. 

Note. —  (1)  Reinsuring  in  unauthorized  company  forfeits  certificate  of  au- 
thority  for  one  year,  and  the  penalty  cannot  be  avoided  by  afterwards  rein- 
suring in  authorized  companies.  (Opinion  of  Attorney  General,  June  29,  1910.) 

(2)  A  licensed  company  may  accept  reinsurance  of  Texas  risks  from  un- 
authorized company.  (Opinion  of  Attorney  General,  September  21,  1911.) 

Pee  for  Agent's  License  $25 — Affidavit  to  Be  Piled. 

(4)  That  the  Commissioner  of  Insurance  and  Banking,  upon  the 
payment  of  license  fee  of  twenty-five  dollars,  issue  to  an  agent  who  is 
regularly  commissioned  to  represent  one  or  more  fire,  fire  and  marine 
insurance  companies  authorized  to  do  business  in  this  State,  a  cer- 
tificate of  authority  to  place  excess  lines  of  insurance  in  companies  not  au- 
thorized to  do  business  in  this  State;  provided,  that  the  party  desiring 
such  excess  insurance   shall  first  file  with  the   Commissioner  of  In- 
surance and  Banking  an  affidavit  that  he  has  exhausted  all  the  insur- 
ance obtainable  from  companies  duly  authorized  to  do  business  in  the 
State. 

Must  Pile  a  Bond. 

(5)  Before  receiving  license   provided  for  in   *  Section  4  of  this 

*Paragraph  4. 


68  INSURANCE  LAWS  OF  TEXAS. 

article,  party  applying  for  same  shall  file  with  the  Commissioner  of 
Insurance  and  Banking  a  bond  in  the  sum  of  one  thousand  dollars, 
payable  to  the  Governor  of  the  State  for  the  faithful  observance  of  the 
provisions  of  this  article.  Said  bond  to  be  approved  by  the  Commis- 
sioner, and  to  be  for  the  benefit  of  the  State  of  Texas. 

Agent  to  Report  on  Oath  and  Keep  a  Separate  Record  of  All  Transac- 
tions. 

(6)  Every  agent  so  licensed  shall  report,  under  oath,  to  the  Com- 
missioner of  Insurance  and  Banking  within  thirty  days  from  the  first 
day  of  January  and  July  of  each  year  the  amount  of  gross  premiums 
received  by  him  for  such  excess  insurance,  and  shall  pay  the  said  Com- 
missioner a  tax  of  5  per  cent  thereon.  The  agent  procuring  a  license 
as  provided  in  this  article  shall  keep  a  separate  record  of  all  transactions 
herein  provided  open  at  all  times  to  the  inspection  of  the  Commissioner 
or  his  legally  appointed  representative.  In  default  of  the  payment  of 
any  sums  which  may  be  due  the  State  under  this  article,  the  said  Com- 
missioner may  sue  for  the  same  in  any  court  of  record  in  this  State. 
(E.  S.,  Art.  4875.) 

Valued  Policy — Shall  Be  Considered  a  Liquidated  Demand. 

183.  A  fire  insurance  policy,  in  case  of  a  total  loss  by  fire  of  prop- 
erty insured,  shall  be  held  and  considered  to  be  a  liquidated  demand 
against  the  company  for  the  full  amount  of  such  policy;  provided,  that 
the  provisions  of  this  article  shall  not  apply  to  personal  property.     (E.  S., 
Art.  4874.) 

Breach  of  Warranty  or  Other  Provision,  Unless  Contributing  to  the  Loss 
Will  Not  Render  Contract  Void. 

184.  No  breach  or  violation  by  the  insured  of  any  of  the  warranties, 
conditions  or  provisions  of  any  fire  insurance  policy,  contract  of  insur- 
ance, or  application  therefor,  upon  personal  property,  shall  render  void 

the  policy  or  contract,  or  constitute  a  defense  to  a  suit  for  loss  thereon, 
unless  such  breach  or  violation  contributed  to  bring  about  the  destruc- 
tion of  the  property.  (Acts  33d  Leg.,  Chap.  105,  Sec.  1.) 

Article  4874,  Revised  Statutes,  Not  Repealed. 

185.  That* the  provisions  hereof    (Section   184  above)    shall  in  no 
way  affect  or  repeal  the  provisions  of  Article  4874  of  the  Ee vised  Civil 
Statutes  of  1911  in  so  far  as  the  same  relates  to  fire  insurance  policies 
upon  real  or  mixed  property.     (Acts  33d  Leg.,  Chap.  105,  Sec.  2.) 

Co-insurance  Clause  in  Policies  Forbidden. 

186.  No  company  subject  to  the  provisions  of  this  chapter  shall  issue 
any  policy  or  contract  of  insurance  covering  property,  real  or  personal, 
situated  in  this  State  which  shall  contain  any  clause  or  provision  re- 
quiring the  assured  to  take  out  and  maintain  a  larger  amount  of  insur- 
ance than  that  expressed  in  such  policy,  nor  in  any  way  providing  that 
the  assured  will  be  liable  as  a  co-insurer  with  the  company  issuing  the 
policy  for  any  part  of  the  loss  or  damage  which  may  be  caused  by  fire 
to  the  property  described  in  the  policy,  and  any  such  clause  or  provi- 


INSURANCE  LAWS  OF  TEXAS.  69 

sion  shall  be  null  and  void  and  of  no  effect,  whether  written  with  or 
without  the  consent  of  the  assured;  and  any  company  issuing  a  policy 
with  such  provision  or  provisions  therein  shall  nevertheless  be  liable  to 
the  assured  for  the  full  amount  of  the  damage  and  loss  sustained  by  the 
property  holder,  not  exceeding  the  face  of  the  policy,  notwithstanding 
such  provision  or  provisions.  (Acts  33d  Leg.,  Chap.  104,  Sec.  1.) 

Exceptions  as  to  Co-insurance  Clause. 

187.  Provided,  that  oil  in  tanks,  wool,  mohair,  grain,  rice,  cotton, 
cotton  seed  oil  mills  and  products  attached  thereto,  are  hereby  exempted 
from  the  provisions  of  this  act.     (Acts  33d  Leg.,  Chap.  104,  Sec.  2.) 

Stipulation  in  Fire  Insurance  Policy  Attempting-  to  Invalidate  Policy 
Account  of  Condition  or  Neglect  Beyond  Control  of  Owner  or  Mort- 
gagor, Void. 

188.  The  interest  of  a  mortgagee  or  trustee  under  any  fire  insurance 
contract  hereafter  issued  covering  any  property  situated  in  this  State 
shall  not  be  invalidated  by  any  act  or  neglect  of  the  mortgagor  or  owner 
of  said  described  property  or  the  happening  of  any  condition  beyond 
his  control,  and  any  stipulation  in  any  contract  in  conflict  herewith 
shall  be  null  and  void.     (Sec.  1,  Chap.  15,  Acts  36th  Leg.) 

State  Insurance  Board  Law  Repealed. 

189.  The  act  approved  September  6,  1910,  known  and  published  as 
Chapter  8  of  the  General  Laws  of  the  Fourth  Called  Session  of  the 
Thirty-first  Legislature  of  the  State  of  Texas,  entitled  "An  Act  pro- 
viding conditions  upon  which  insurance  companies  writing  contracts  or 
policies  of  insurance  against  the  hazard  of  fire  may  transact  business  in 
the  State  of  Texas,  and  providing  for  the  making,  promulgation,  regu- 
lation and  control  of  general  basis  schedules,  insurance  rates  and  pre- 
miums and  forms  of  insurance  policies ;  providing  certain  conditions  and 
limitations  on  insurance  contracts  or  policies;  providing  for  maximum 
insurance  rates  and  how  companies  may  write  contracts  of  insurance  at 
rates  lower  than  the  maximum  rates  and  the  filing  of  statements  of  re- 
duced rates  with  the  State  Insurance  Board  and  certified  copies  thereof 
with  city  secretaries  and  county  clerks  and  fixing  fees  of  said  last  two 
officers  for  such  service;  to  prevent  discrimination  in  insurance  rates  or 
premiums;  except  as  provided  in  this  act  to  create  a  State  Insurance 
Board,  and  prescribing  the  duties  and  authority  of  said  board  and  each 
member  thereof,  and  fixing  the  salaries  of  the  members  thereof;  and 
providing  for  their  appointment  and  removal;  providing  certain  duties 
for  and  to  give  certain  authority  to  the  Commissioner  of  Insurance  and 
Banking;  appropriating  money  necessary  to  carry  out  the  provisions  of 
this  act;  providing  penalties  for  the  violation  of  certain  provisions  of 
this  act;  fixing  the  time  when  this  act  shall  go  into  effect  and  repealing 
Chapter  18  of  the  General  Laws  of  the  State  of  Texas,  passed  by  the 
First  Called  Session  of  the  Thirty-first  Legislature  and  all  other  laws 
and  parts  of  laws  in  conflict  herewith,  and  declaring  an  emergency,"  is 
hereby  repealed.     (Acts  33d  Leg.,  Chap.  106,  Sec.  1.) 


70  INSURANCE  LAWS  OF  TEXAS. 

Maximum  Premium  Rates  Shall  Be  Fixed  by  the  Commission. 

190.  After  this  act  shall  take  effect,  a  maximum  rate  of  premiums 
to  be  charged  or  collected  by  all  companies  transacting  in  this  State  the 
business  of  fire  insurance,  as  herein  defined,  shall  be  exclusively  fixed 
and  determined  and  promulgated  by  the  State  Fire  Insurance  Commis- 
sion created  by  this  act,  and  no  such  fire  insurance  company  shall,  after 
this  act  takes  effect,  charge  or  collect  any  premium  or  other  compen- 
sation for  or  on  account  of  any  policy  or  contract  of  fire  insurance  as 
herein  defined  in  excess  of  the  maximum  rate  as  herein  provided  for, 
but  may  write  insurance  at  a  less  rate  than  the  maximum  rate  as  herein 
provided  for;  provided,  that  when  insurance  is  written  for  less  than  the 
maximum  rate,  such  lesser  rate  shall  be  applicable  to  all  risks  of  the 
same  character  situated  in  the  same  community.     (Acts  33d  Leg.,  Chap. 
106,  Sec.  2.) 

Every  Company  Writing  Fire  Insurance  in  This  State  Is  Subject  to  Pro- 
visions of  State  Insurance  Commission  Act. 

191.  Every  fire  insurance  company,  every  marine  insurance  com- 
pany, every  fire  and  marine  insurance  company,  every  fire  and  tornado 
insurance  company,  and  each  and  every  insurance  company  of  every 
kind  and  name  issuing  a  contract  or  policy  of  insurance,  or  contracts  or 
policies  of  insurance  against  loss  by  fire  on  property  within  this  State, 
whether  such  property  be  fixed  or  movable,  stationary  or  in  transit,  or 
whether  such  property  is  consigned  or  billed  for  shipment  within  or  be- 
yond the  boundary  of  this  State,  or  to  some  foreign  country,  whether 
such  company  is  organized  under  the  laws  of  this  State,  or  under  the 
laws  of  any  other  State,  Territory  or  possession  of  the  United  States  or 
foreign  country,  or  by  authority  of  the  Federal  government,  now  hold- 
ing a  certificate  of  authority  to  transact  business  in  this  State,  shall  be 
deemed  to  have  accepted  such  certificate  and  to  transact  business  there- 
under, upon  condition  that  it  consents  to  the  terms  and  provisions  of 
this  act  and  that  it  agrees  to  transact  business  in  this  State,  subject 
thereto;  it  being  intended  that  every  contract  or  policy  of  insurance 
against  the  hazard  of  fire  shall  be  issued  in  accordance  with  the  terms 
and  provisions  of  this  act,  and  the  company  issuing  the  same  governed 
thereby,  regardless  of  the  kind  and  character  of  such  property  and 
•whether  the  same  is  fixed  or  movable,  stationary  or  in  transit,  including 
the  shore  end  of  all  marine  risks  insured  against  loss  by  fire.     (Acts 
33d  Leg.,  Chap.  106,  Sec.  3.) 

Commission  Created — Who  Compose — How  and  When  Appointed. 

192.  That  there  may  be  reasonable  and  just  insurance  rates  in  Texas, 
there  is  hereby  created  a  Commission  to  be  known  as  the  "State  In- 
surance Commission,"  which  shall  be  composed  of  the  Commissioner  of 
Insurance  and  Banking,  who  shall  be  chairman  thereof,  and  two  com- 
missioners who  shall  be  appointed  by  the  Governor,  by  and  with  the  con- 
sent of  the  Senate,  subject  to  removal  as  provided  for  removal  of  State 
officers  by  Article  3528  of  the  Eevised  Statutes  of  Texas;  the  members 
of  said   Commission,  other  than  the   Commissioner  of   Insurance  and 
Banking,  shall  be  appointed  as  herein  provided  within  ten  days  after 
this  act  takes  effect;  one  of  said  members  tp  be  so  appointed  shall  be 


INSURANCE  LAWS  OP  TEXAS.  71 

appointed  for  a  term  ending  February  1,  1914,  and  biennially  there- 
after; the  other  of  said  members  of  said  Commission  shall  be  appointed 
for  a  term  ending  February  1,  1915,  and  biennially  thereafter,  and  the 
Governor  in  making  his  first  appointments  to  fill  these  respective  offices 
shall  designate  which  of  said  officers  shall  fill  the  term  expiring  Febru- 
ary 1,  1914,  and  which  of  said  officers  shall  fill  the  term  expiring  Feb- 
ruary 1,  1915.  The  Commissioner  of  Insurance  and  Banking,  for  the 
purpose  of  this  act,  may  be  referred  to  as  the  Commissioner  of  Insur- 
ance. (Acts  33d  Leg.,  Chap.  106,  Sec.  4.) 

Compensation  of  Members  of  Commission — Expenses  of  Commission. 

193.  The  members  of  the  Commission  other  than  the  Commissioner 
of  Insurance  and  Banking,  shall  each  receive  as  compensation  for  their 
services  the  sum  of  thirty-six  hundred  dollars    ($3600)    per  annum; 
and  the  Commissioner  of  Insurance  and  Banking  shall  receive  as  com- 
pensation or  salary  for  his  services,  under  this  act,  the  sum  of  five 
hundred  dollars  ($500)  per  annum,  in  addition  to  his  compensation  as 
now  fixed  by  law.     Such  salary  of  the  two  appointed  members  of  said 
Commission  and  the  said  five  hundred  dollars    ($500)    salary  of  the 
Commissioner  of  Insurance  and  Banking,  together  with  the  necessary 
compensation  of  experts,  clerical  force,  and  other  persons  employed  by 
said  Commission,  and  all  necessary  traveling  expenses,  and  such  other 
expenses  as  may  be  necessary,  incurred  in  carrying  out  the  provisions 
of  this  act,  shall  be  paid  by  warrants  drawn  by  the  Comptroller  upon 
the  State  Treasurer  upon  the  order  of  said  Commission;  provided,  that 
the  total  amount  of  salaries  and  said  other  expenses  shall  not  exceed  the 
sum  produced  by  the  assessment  of  one  and  one-fourth  (1J)  per  cent 
of  the  gross  premium  of  all  fire  insurance  companies  doing  business  in 
this  State  as  provided  in  Section  29  of  said  act.      (Acts  35th  Leg., 
Chap.  73,  Sec.  1.) 

Commission  Shall  Fix,  Alter  or  Amend  Rates — Shall  Employ  Necessary 
Experts  and  Assistants. 

194.  The  State  Fire  Insurance  Commission  shall  have  the  sole  and 
exclusive  power  and  authority  and  it  shall  be  its  duty  to  prescribe,  fix, 
determine  and  promulgate  the  rates  of  premiums  to  be  charged  and 
collected  by  fire  insurance  companies  transacting  business  in  this  State. 
As  soon  as  practicable  after  this  act  shall  take  effect,  the  State  Fire 
Insurance  Commission  shall  begin  the  work  of  fixing  and  determining 
and  promulgating  the  rates  of  premiums  to  be  charged  and  collected 
by  fire  insurance  companies  throughout  the  State,  and  the  making  and 
adoption  of  its  schedules  of  such  rates,  and  then  until  such  time  as 
this  work  shall  have  been  fully  completed  said  Commission  shall  have 
full  power  and  authority  to  adopt  and  continue  in  force  the  rates  of 
premiums  which  may  be  lawfully  charged  and  collected  when  this  act 
shall  take  effect,  or  any  portion  thereof,  for  such  time  as  it  may  pre- 
scribe, or  until  the  work  of  making  such  schedules  for  the  entire  State 
shall  be  completed.    Said  Commission  shall  also  have  authority  to  alter 
or  amend  any  and  all  such  rates  of  premiums  so  fixed  and  determined 
and  adopted  by  it,  and  to  raise  or  lower  the  same,  or  any  part  thereof, 
as  herein  provided.     Said  Commission  shall  have  authority  to  employ 


7#  INSURANCE  LAWS  OF  TEXAS. 

clerical  help,  inspectors,  experts  and  other  assistants,  and  to  incur  such 
other  expenses  as  may  be  necessary  in  carrying  out  the  provisions  of  this 
act;  provided,  that  such  expenses,  including  the  salaries  of  the  members 
of  the  Commission,  shall  not  exceed  in  the  aggregate,  for  any  fiscal 
year,  the  sum  of  one  hundred  and  thirty  thousand  dollars  ($130,000). 
(Acts  35th  Leg.,  Chap.  73,  Sec.  2.) 

Shall  Classify  Fire  Losses  and  Amount  of  Premium  Collected  Therefor. 

195.  It  shall  be  the  duty  of  said  Commission  to  ascertain,  as  soon 
as  practicable,  the  annual  fire  loss  in  this  State;  to  obtain,  to  make  and 
maintain  a  record  thereof  and  collect  such  data,  and  information  with 
respect  thereto  as  will  enable  said  Commission  to  classify  the  fire  losses 
of  this  State,  the  causes  thereof,  and  the  amount  of  premiums  collected 
therefor  for  each  class  of  risks  and  the  amount  paid  thereon,  in  such 
manner  as  will  be  of  assistance  in  determining  equitable  insurance  rates, 
methods  of  reducing  such  fire  losses  and  reducing  the  insurance  rates  of 
the   State,  or  subdivision  of  the   State.      (Acts  35th  Leg.,   Chap.   73, 
Sec.  2.) 

Selection  of  Secretary  and  Fire  Marshal  of  the  Commission. 

196.  For  the  purpose  of  facilitating  the  work  of  said  Commission, 
one  of  the  appointed  members  thereof  shall  be  selected  by  the  Commis- 
sion as  its  secretary,  who  shall  perform  the  duties  which  shall  appertain 
to  that  position,  and  whose  official  title  shall  be  "Secretary  of  the  State 
Insurance  Commission";  the  other  of  said  appointed  members  thereof 
shall  be  selected  by  said  Commission  as  Fire  Marshal  of  the  State  In- 
surance Commission,  and  his  official  title  shall  be  "Fire  Marshal  of  the 
State  Insurance  Commission" ;  but  the  said  members  so  selected  as  Sec- 
tary and  Fire  Marshal  as  aforesaid,  shall  receive  no  compensation  for 
filling  their  respective  positions  other  than  their  salaries  as  members  of 
the  State  Insurance  Commission,  and  shall  perform  the  duties  of  those 
respective  positions  at  the  will  of  the  Commission,  but  their  expenses 
incurred  in  performing  the  duties  of  these  positions  shall  be  paid  as 
provided  in  this  act.     (Acts  33d  Leg.,  Chap.  106,  Sec.  7.) 

Duties  of  Fire  Marshal. 

197.  It  shall  be  the  duty  of  the  Fire  Marshal  of  the  State  Fire  In- 
surance Commission,  who,  for  the  purpose  of  this  act,  shall  be  referred 
to  as  the  State  Fire  Marshal,  at  the  discretion  of  the  board  and  upon 
the  request  of  the  mayor  of  any  city  or  village,  or  the  chief  of  a  fire 
department  of  any  city  or  village,  or  any  fire  marshal  where  a  fire 
occurs  within  such  city  or  village,  or  of  a  county  or  a  district  judge 
or  of  a  sheriff  or  county  attorney  of  any  county  where  a  fire  occurs 
within  the  district  or  county  of  the  officers  making  such  request,  or  of 
any  fire  insurance  company,  or  its  general,  State  or  special  agent,  in- 
terested in  a  loss,  or  of  a  policyholder  sustaining  a  loss,  or  upon  the 
direction  of  the  State  Fire  Insurance  Commission  to  forthwith  investi- 
gate at  the  place  of  such  fire  before  loss  can  be  paid,  the  origin,  cause 
and  circumstances  of  any  fire  occurring  within  this   State,  whereby 
property  has  been  destroyed  or  damaged,  and  shall  ascertain  if  possible 
whether  the  same  was  the  result  of  any  accident,  carelessness  or  de- 


INSURANCE  LAWS  OF  TEXAS.  73 

sign,  and  shall  make  a  written  report  thereof  to  the  State  Insurance 
Commission.  The  State  Fire  Marshal  shall  have  the  power  to  admin- 
ister oaths,  take  testimony,  compel  the  attendance  of  witnesses  and  the 
production  of  documents.  When,  in  his  opinion,  further  investigation 
is  necessary,  he  shall  take  or  cause  to  be  taken  the  testimony  on  oath 
of  all  persons  supposed  to  be  cognizant  of  any  facts,  or  to  have  knowl- 
edge in  relation  to  the  matter  under  investigation,  and  shall  cause  the 
same  to  be  reduced  to  writing,  and  if  he  shall  be  of  the  opinion  that 
there  is  evidence  sufficient  to  charge  any  person  with  the  crime  of 
arson,  or  with  the  attempt  to  commit  arson,  or  of  conspiracy  to  defraud 
OT  criminal  conduct  in  connection  with  such,  he  shall  arrest  or  cause 
to  be  arrested  such  person,  and  shall  furnish  to  the  proper  prosecuting 
attorney  all  evidence  secured,  together  with  the  names  of  witnesses  and 
all  information  obtained  by  him,  including  a  copy  of  all  pertinent  and 
material  testimony  taken  in  the  case,  and  it  shall  be  the  duty  of  the 
State  Fire  Marshal  to  assist  in  the  prosecution  of  all  such  complaints 
filed  by  him.  Provided,  that  all  investigations  held  by  or  under  the 
direction  of  the  State  Fire  Marshal  may,  in  his  discretion,  be  private, 
and  persons  other  than  those  required  to  be  present  may  be  excluded 
from  the  place  where  such  investigation  is  held,  and  the  witnesses  may 
be  kept  separate  and  apart  from  each  other  and  not  allowed  to  com- 
municate with  such  others  until  they  have  been  examined;  and  all  tes- 
timony taken  in  an  investigation  under  the  provisions  of  this  act  may 
at  the  election  of  the  State  Fire  Marshal  be  withheld  from  the  public. 
(Acts  35th  Leg.,  Chap.  73,  Sec.  3.) 

Authority  and  Powers  of  Fire  Marshal. 

198.  The  State  Fire  Marshal  is  hereby  authorized  to  enter  at  any 
time  any  buildings  or  premises  where  fire  occurred  or  is  in  progress, 
or  any  place  contiguous  thereto,  for  the  purpose  of  investigating  the 
cause,  origin  and  circumstances  of  such  fire.  The  State  Fire  Marshal, 
upon  complaint  of  any  person,  shall,  at  all  reasonable  hours,  for  the 
purpose  of  examination,  enter  into  and  upon  all  buildings  and  premises 
within  this  State,  and  it  shall  be  his  duty  to  enter  upon  and  make 
or  cause  to  be  entered  upon  or  made,  at  any  time,  a  thorough  exam- 
ination of  mercantile,  manufacturing  and  public  buildings,  and  all 
places  of  public  amusement,  or  where  public  gatherings  are  held,  to- 
gether with  the  premises  belonging  thereto.  Whenever  he  shall  find 
any  building  or  other  structure  which,  for  want  of  repair  or  by  reason 
of  age  or  dilapidated  condition,  or  which  for  any  cause  is  liable  to 
fire,  and  which  is  so  situated  as  to  endanger  other  buildings  or  prop- 
erty, or  is  so  occupied  that  fire  would  endanger  persons  or  property 
therein,  and  whenever  he  shall  find  an  improper  or  dangerous  arrange- 
ment of  stoves,  ranges,  furnaces  or  other  heating  appliances  of  any 
kind  whatsdever,  including  chimneys,  flues  and  pipes  with  which  the 
same  may  be  connected,  or  dangerous  arrangement  of  lighting  systems 
or  devices,  or  a  dangerous  storage  of  explosives,  compounds,  petroleum, 
gasoline,  kerosene,  dangerous  chemicals,  vegetable  products,  ashes,  com- 
bustible, inflammable  and  refuse  materials,  or  other  conditions  which 
may  be  dangerous  in  character,  or  liable  to  cause  or  promote  fire,  or 
create  conditions  dangerous  to  firemen  or  occupants,  he  shall  order  the 


74  INSURANCE  LAWS  OF  TEXAS. 

same  to  be  removed  or  remedied,  and  such  order  shall  be  forthwith 
complied  with  by  the  occupant  or  owner  of  such  building  or  premises, 
and  the  State  Fire  Marshal  is  hereby  authorized,  when  necessary,  to 
apply  to  a  court  of  competent  jurisdiction  for  the  necessary  writs  or 
orders  to  enforce  the  provisions  of  this  section,  and  in  such  case  he  shall 
not  be  required  to  give  bond.  (Acts  35th  Leg.,  Chap.  73,  Sec.  4.) 

Pire  Marshal  May  Designate  a  Local  Fire  Marshal  or  Other  Person  to 
Act  for  Him — Expenses  of  Investigation,  by  Whom  Paid. 

199.  If  for  any  reason  the  State  Fire  Marshal  is  unable  to  make 
any  required  investigation  in  person,  he  may  designate  the  fire  marshal 
of  such  city  or  town  or  some  other  suitable  person  to  act  for  him;  and 
such  person  so  designated  shall  have  the  same  authority  as  is  herein 
given  the  State  Fire  Marshal  with  reference  to  the  particular  matter 
to  be  investigated  by  him,  and  shall  receive  such  compensation  for  his 
services  as  may  be  allowed  by  the  State  Insurance  Commission.     If  the 
investigation  of  a  fire  is  made  at  the  request  of  an  insurance  company, 
or  at  the  request  of  a  policyholder  sustaining  loss,  or  at  the  request  of 
the  mayor,  town  clerk  or  chief  of  the  fire  department  of  any  city,  vil- 
lage or  town  in  which  the  fire  occurred,  then  the  expenses  of  the  Fire 
Marshal,  clerical  expenses,  witnesses  and  officers'  fees  incident  and  neces- 
sary to  such  investigation  shall  be  paid  by  such  insurance  company,  or 
such  policyholder  of  such  city  or  town,  as  the  case  may  be,  otherwise 
the  expenses  of  such  investigation  are  to  be  paid  as  part  of  the  expenses 
of  the  State  Insurance  Commission.     Provided,  the  party  or  parties, 
company  or  companies,  requesting  such  investigation  shall  before  such 
investigation  is  commenced  deposit  with  the  State  Insurance  Commis- 
sion an  amount  of  money  in  the  judgment  of  said  Commission  suffi- 
cient to  defray  the  expenses  of  said  Fire  Marshal  in  conducting  such 
investigation.     (Acts  33d  Leg.,  Chap.  106,  Sec.  10.) 

No  Action  or  Investigation  by  Pire  Marshal  Shall  in  Any  Way  Affect 
Bights  of  Policyholders. 

200.  No  action  taken  by  the  State  Fire  Marshal  shall  affect  the  rights 
of  any  policyholder  or  any  company  in  respect  to  a  loss  by  reason  of 
any  fire  so  investigated;  nor  shall  the  result  of  any  such  investigation 
be  given  in  evidence  upon  the  trial  of  any  civil  action  upon  such  pol- 
icy,  nor   shall   any   statement   made   by   any   insurance   company,   its 
officers,  agents  or  adjusters,  nor  by  any  policyholder,  or  any  one  repre- 
senting him,  made  with  reference  to  the  origin,  cause  or  supposed  origin 
or  cause  of  a  fire  to  the  Fire  Marshal  or  to  any  one  acting  for  him  or 
under  his  direction,  be  admitted  in  evidence  or  made  the  basis  for  any 
civil  action  for  damages.     (Acts  33d  Leg.,  Chap.  106,  Sec.  11.) 

Authority  and  Powers  of  Commission  and  Its  Agents  or  Representatives. 
201.  That  said  Commission  is  authorized  and  empowered  to  require 
sworn  statements  from  any  insurance  company  affected  by  this  act,  and 
from  any  of  its  directors,  officers,  representatives,  general  agents,  State 
agents,  special  agents  and  local  agents  of  the  rates  and  premiums  col- 
lected for  fire  insurance  on  each  class  of  risks,  on  all  property  in  this 
State  during  any  or  all  years  for  the  five  years  next  preceding  the  first 
day  of  January,  1913,  and  of  the  causes  of  fire,  if  such  be  known,  if  they 


INSURANCE  LAWS  OF  TEXAS.  75 

are  in  possession  of  such  data,  and  information,  or  can  obtain  it  at  a 
reasonable  expense;  and  said  Commission  is  empowered  to  require  such 
statements  for  any  period  of  time  after  the  first  day  of  January,  1913, 
and  said  Commission  is  empowered  to  require  such  statements  showing 
all  necessary  facts  and  information  to  enable  said  Commission  to  make, 
amend  and  maintain  the  general  basis  schedules  provided  for  in  this  act, 
and  the  rules  and  regulations  for  applying  same  and  to  determine  rea- 
sonable and  proper  maximum  specific  rates  and  to  determine  and  assist 
in  the  enforcement  of  the  provisions  of  this  act.  The  said  Commission 
shall  also  have  the  right,  at  its  discretion,  either  personally,  or  by  some 
one  duly  authorized  by  it  to  visit  the  office  whether  general,  local  or 
otherwise,  of  any  insurance  company  doing  business  in  this  State,  and 
the  home  office  of  said  company  outside  of  this  State,  if  there  be  such, 
and  the  office  of  any  officers,  directors,  general  agents,  State  agents,  local 
agents  or  representatives  of  such  company,  and  there  require  such  com- 
pany, its  officers,  agents  or  representatives  to  produce  for  inspection  by 
said  Commission  or  any  of  its  duly  authorized  representatives  all  books, 
records  and  papers  of  such  company  or  such  agents  and  representatives; 
and  the  said  Commission  or  its  duly  authorized  agents  or  representa- 
tives shall  have  the  right  to  examine  such  books  and  papers  and  make 
or  cause  to  be  made  copies  thereof ;  and  shall  have  the  right  to  take  tes- 
timony under  oath  with  reference  thereto,  and  to  compel  the  attend- 
ance of  witnesses  for  such  purpose ;  and  any  company,  its  officers,  agents 
or  representatives  failing  to  make  such  statements  and  reports  herein 
referred  to  and  failing  or  refusing  to  permit  the  examination  of  books, 
papers  and  records  as  herein  required,  when  so  called  upon  or  declin- 
ing or  failing  to  comply  with  any  provisions  of  this  section  shall  be 
subject  to  the  penalties  provided  for  in  Section  26  of  this  act.  Said! 
Commission  shall  be  further  authorized  and  empowered  to  require  the 
fire  insurance  companies,  transacting  business  in  this  State  or  any  of 
them,  to  furnish  said  Commission  with  any  and  all  data  which  may  be 
in  their  possession,  either  jointly  or  severally,  including  maps,  tariffs, 
inspection  reports  and  any  and  all  data  affecting  fire  insurance  risks 
in  this  State,  or  in  any  portion  thereof,  and  said  Commission  shall  be 
authorized  and  empowered  to  require  any  two  or  more  of  said  com- 
panies, or  any  joint  agent  or  representative  of  them,  to  turn  over  any 
and  all  such  data  in  their  possession,  or  any  part  thereof,  to  said  Com- 
mission for  its  use  in  carrying  out  the  provisions  of  this  act.  (Acts, 
33d  Leg.,  Chap.  106,  Sec.  12.) 

Bates  Fixed,  Promulgated  and  Published  by  Commission  Under  Certaini 
Limitations  and  Conditions. 

202.  The  rates  of  premium  fixed  by  said  Commission  under  and 
in  pursuance  of  the  provisions  of  this  act  shall  be  at  all  times  reason- 
able and  the  schedules  thereof  made  and  promulgated  by  -said  Commis- 
sion as  herein  provided,  shall  be  in  such  form  as  will  in  the  judgment: 
of  the  Commission,  most  clearly  and  definitely  and  in  detail  disclose- 
the  rate  so  fixed  and  determined  by  said  Commission  to  be  charged  and 
collected  for  policies  of  fire  insurance.  Said  Commission  may  employ 
and  use  any  facts  and  information  now  in  the  possession  of  the  present 
State  Insurance  Board,  as  well  as  all  facts  obtainable  from  and  con- 
cerning fire  insurance  companies  transacting  business  in  this  State,. 


76  INSURANCE  LAWS  OF  TEXAS. 

showing  their  expense  and  charges  for  fire  insurance  premiums,  for 
any  period  or  periods,  said  Commission  may  deem  advisable,  which  in 
their  opinion  will  enable  them  to  devise  and  fix  and  determine  reason- 
able rates  of  premium  for  fire  insurance.  The  said  Commission  in 
making  and  publishing  schedules  of  the  rates  fixed  and  determined  by 
it  shall  show  all  charges,  credits,  terms,  privileges  and  conditions  which 
in  anywise  affect  such  rates,  and  copies  of  all  such  schedules  shall  be 
furnished  by  said  Commission  to  any  and  all  companies  affected  by  this 
act  applying  therefor,  and  the  same  shall  be  furnished  to  any  citizens 
of  this  State  applying  therefor,  upon  the  payment  of  the  actual  cost 
thereof.  No  rate  or  rates  fixed  or  determined  by  the  Commission  shall 
take  effect  until  it  shall  have  entered  an  order  or  orders  fixing  and  de- 
termining same,  and  shall  give  notice  thereof  to  all  fire  insurance  com- 
panies affected  by  this  act,  authorized  to  transact  business  in  the  State. 
It  shall  be  the  duty  of  the  State  Fire  Insurance  Commission,  and  of 
any  inspector  or  other  agent  or  employe  thereof,  who  shall  inspect  any 
risk  for  the  purpose  of  enabling  the  Commission  to  fix  and  determine 
the  reasonable  rate  to  be  charged  thereon,  to  furnish  to  the  owner  of 
such  risk  at  the  date  of  such  inspection,  a  copy  of  the  inspection  re- 
port, showing  all  defects  that  may  operate  as  charges  to  increase  the 
insurance  rate.  (Acts  33d  Leg.,  Chap.  106,  Sec.  13.) 

Commission  May  Amend  or  Change  Bate,  and  Prescribe  Rules  and  Regu- 
lations for  Certain  Risks. 

203.  Said  Commission  shall  have  full  power  and  authority  to  alter, 
amend,   modify,   or  change   any  rate   fixed   and   determined   by   it   on 
thirty  days'  notice,  or  to  prescribe  that  any  such  rate  or  rates  shall  be 
in  effect  for  a  limited  time,  and  said  Commission  shall  also  have  full 
power   and  authority   to   prescribe   reasonable   rules  whereby   in   cases 
where  no  rate  of  premium  shall  have  been  fixed  and  determined  by  the 
Commission,  for  certain  risks  or  classes  of  risks,  policies  may  be  writ- 
ten thereon  at  rates  to  be  determined  by  the  company;  provided,  how- 
ever, that  such  company  or  companies  shall  immediately  report  to  said 
Commission  such  risk  so  written,  and  the  rates  collected  therefor,  and 
such  rates  shall  always  be  subject  to  review  by  the  Commission.     (Acts 
33d  Leg.,  Chap.  106,  Sec.  13.) 

Commission  Has  Power  to  Fix  and  Regulate  Rates  According  to  Hazard. 

204.  Any  fire  insurance  company  or  companies  affected  by  this  act 
shall  have  the  right  at  any  time  to  petition  the  Commission  for  an 
order  changing  or  modifying  any  rate  or  rates  fixed  and  determined 
by  the  Commission,  and  the  Commission  shall  consider  such  petition  in 
the  manner  provided  in  this  act,  and  enter  such  order  thereon  as  it 
may  deem  just  and  equitable.     The   Commission  shall  have  full   au- 
thority and  power  to  give  each  city,  town,  village  or  locality  credit  for 
each  and  every  hazard  they  may  reduce  or  entirely  remove,  and  also 
for  all  added  fire  fighting  equipment,  increased  police  protection,  or 
any  other  equipment  or  improvement  that  has  a  tendency  to  reduce  the 
fire  hazard  of  any  such  city,  town,  village  or  locality,  and  also  to  give 
credit  for  a  good  fire  record  made  by  any  city,  town,  village  or  locality. 
Said  Commission  shall  also  have  the  power  and  authority  to  compel 


INSURANCE  LAWS  OF  TEXAS.  77 

any  company  to  give  any  or  all  policyholders  credit  for  any  and  all 
hazards  that  said  policyholder  or  holders  may  reduce  or  remove.  Said 
credit  shall  be  in  proportion  to  such  reduction  or  removal  of  such 
hazard  and  said  company  or  companies  shall  return  to  such  policy- 
holder  or  holders  such  proportional  part  of  the  unearned  premium 
charged  for  such  hazard  that  may  be  reduced  or  removed.  (Acts  33d 
Leg.,  Chap.  106,  Sec.  14.) 

Company  Shall  Furnish  Analysis  of  Bate — Commission  Schedules  Shall 
Be  Open  to  Public. 

205.  When  a  policy  of  fire  insurance  shall  be  issued  by  any  company 
transacting  the  business  of  fire  insurance  in  this  State,  such  company 
shall  furnish  the  policy  holder  with  a  written  or  printed  analysis  of 
the  rate  or  premium  charged  for  such  policy,  showing  the  items  of 
charge  and  credit  which  determine  the  rate,  unless  such  policyholder 
has  theretofore  been  furnished  with  such  analysis  of  such  rate.     All 
schedules  of  rates  promulgated  by  said  Commission  shall  be  open  to 
the  public  at  all  times,  and  every  local  agent  of  a  fire  insurance  com- 
pany transacting  business  in  this  State  shall  have  and  exhibit  to  the 
public  copies  of  such  schedules  covering  all  risks  upon  which  he  is  au- 
thorized to  write  insurance.     (Acts  33d  Leg.,  Chap.  106,  Sec.  15.) 

Commission,  After  Giving  Notice,  May  Change  Bates  to  Be  Collected  by 
All  Companies. 

206.  The   Commission   shall  have  full  power  and  authority   after 
having  given  reasonable  notice,  not  exceeding  thirty  days,  of  its  inten- 
tion to  do  so,  to  alter,  amend  or  revise  any  rates  of  premium  fixed  and 
determined  by  it  in  any  schedules  of  such  rates  promulgated  by  it  as 
herein  provided,  and  to  give  reasonable  notice  of  such  alteration,  amend- 
ment or  revision  to  the  public,  or  to  any  company  or  companies  affected 
thereby.     Such  altered,   amended  or  revised  rates  shall  be  the   rates 
thereafter  to  be  charged  and  collected  by  all  fire  insurance  companies 
affected  by  this  act;  provided,  that  no  policy  in  force  prior  to  the  tak- 
ing effect  of  such  changes,  or  amendments  shall  be  affected  thereby, 
unless  there  shall  be  a  change  in  the  hazard  of  the  risk,  necessitating  a 
change  in  the  rate,  applicable  to  such  risk,  in  which  event  such  policy 
shall  be  subject  to  the  new  rates.     (Acts  33d  Leg.,  Chap.  106,  Sec.  16.) 

Commission  Shall  Establish  and  Furnish  Uniform  Policy  Forms,  Includ- 
ing Endorsements  and  Clauses  Placed  Thereon. 

207.  It  shall  be  the  duty  of  the   State  Insurance   Commission  to 
make,  promulgate  and  establish  uniform  policies  of  insurance   appli- 
cable to  the  various  risks  of  this  State,  copies  of  which  uniform  policies 
shall  be  furnished  each  company  doing  business  in  this  State  or  which 
may  hereafter  do  business  in  this  State.     That  after  such  uniform  pol- 
icies shall  have  been  established  and  promulgated  and  furnished  the  re- 
spective companies  doing  business  in  this  State,  such  companies  shall, 
within  sixty  days  after  the  receipt  of  such  forms  of  policies,  adopt  and 
use  said  form  or  forms  and  no  other;  also  all  companies  which  may 
commence  business  in  this  State  after  the  adoption  and  promulgation 
of  such  forms  of  policies,  shall  adopt  and  use  the  same  and  no  other 
forms  of  policies. 


78  INSURANCE  LAWS  OF  TEXAS. 

The  said  State  Fire  Insurance  Commission  shall  also  prescribe  all 
standard  forms,  clauses  and  endorsements  used  on  or  in  connection  with 
insurance  policies.  All  other  forms,  clauses  and  endorsements  placed 
upon  insurance  policies  shall  be  placed  thereon  subject  to  the  approval 
of  the  Commission.  The  Commission  shall  also  have  authority  in  its 
discretion  to  change,  alter  or  amend  such  form  or  forms  of  policy  or 
policies,  and  such  clauses  and  endorsements  used  in  connection  there- 
with, upon  giving  notice  and  proceedings  in  accordance  with  Section  21 
of  this  act.  (Acts  33d  Leg.,  Chap.  106,  Sec.  17.) 

Any  Provision  in  a  Policy  Declaring  It  Void  Because  of  a  Lien  on  the 
Insured  Property  Shall  Be  Void. 

208.  Any  provision  in  any  policy  of  insurance  issued  by  any  com- 
pany subject  to  the  provisions  of  this  act  to  the  effect  that  if  said  prop- 
erty is  encumbered  by  a  lien  of  any  character,  or  shall  after  the  issu- 
ance of  such  policy  become  encumbered  by  a  lien  of  any  character,  that 
such  encumbrance  shall  render  such  policy  void,  shall  be  of  no  force 
and  effect,  and  any  such  provision  within  or  placed  upon  any  such 
policy  shall  be  absolutely  null  and  void.     (Acts  33d  Leg.,  Chap.  106, 
Sec.  18.) 

Co-insurance  Clause  Prohibited. 

209.  No  company  subject  to  the  provisions  of  this  act  may  issue  any 
policy  or  contract  of  insurance  covering  property  in  this  State,  which 
shall  contain  any  clause  or  provision  requiring  the  assured  to  take  out 
or  maintain  a  larger  amount  of  insurance  than  that  expressed  in  such 
policy,  nor  in  any  way  providing  that  the  assured  shall  be  liable  as  co- 
insurer  with  the  company  issuing  the  policy  for  any  part  of  the  loss  or 
damage  which  may  be  caused  by  fire  to  the  property  described  in  such 
policy,  and  any  such  clause,  or  provision  shall  be  null  and  void,  and  of 
no  effect;  provided,  that  the  co-insurance  clauses  and  provisions  may 
be  inserted  in  policies  written  upon  cotton,  grain  or  other  products  in 
process  of  marketing,  shipping,  storing  or  manufacture.      (Acts  33d 
Leg.,  Chap.  106,  Sec.  19.) 

Complaints  as  to  Bates  Fixed  by  the  Commission  Shall  Be  Heard  and 
Adjusted  by  the  Commission. 

210.  Any  citizen  or  number  of  citizens  of  this  State  or  any  policy- 
holder  OT  policyholders,  or  any  insurance  company  affected  by  this  act, 
or  any  Board  of  Trade,  Chamber  of  Commerce,  or  other  civic  organiza- 
tion, or  the  civil  authorities  of  any  town,  city  or  village,  shall  have  the 
right  to  file  a  petition  with  the  State  Fire  Insurance  Commission,  set- 
ting forth  any  cause  of  complaint  that  they  may  have  as  to  any  order 
made  by  this  Commission,  or  any  rate  fixed  and  determined  by  the 
Commission,  and  they  shall  have  the  right  to  offer  evidence  in  support 
of  the  allegations  of  such  petition  by  witnesses,  or  by  depositions,  or  by 
affidavits;  upon  the  filing  of  such  petition,  the  party  complained  of,  if 
other  than  the  Commission  shall  be  notified  by  the  Commission  of  the 
filing  of  such  petition  and  a  copy  thereof  furnished  the  party  or  par- 
ties, company  or  companies,  of  whom  complaint  is  made,  and  the  said 
petition  shall  be  set  down  for  a  hearing  at  a  time  not  exceeding  thirty 


INSURANCE  LAWS  OF  TEXAS.  79 

days  after  the  filing  of  such  petition  and  the  Commission  shall  hear 
and  determine  said  petition;  but  it  shall  not  be  necessary  for  the  peti- 
tioners or  any  one  of  them  to  be  present  to  present  the  cause  to  the 
Commission,  but  they  shall  consider  the  testimony  of  all  witnesses, 
whether  such  witnesses  testify  in  person  or  by  depositions,  or  by  affi- 
davits, and  if  it  be  found  that  the  complaint  made  in  such  petition  is  a 
just  one,  then  the  matter  complained  of  shall  be  corrected  or  required 
to  be  corrected  by  said  Commission.  (Acts  33d  Leg.,  Chap.  106,  Sec.  20.) 

Commission  Shall  Give  Notice  to  All  Parties  Affected  by  Its  Orders — 
Shall  Hear  Protests — Any  Dissatisfied  Party'  May  Bring  Suit — Pro- 
ceedings in  Case  of  Suit. 

211.  The  State  Fire  Insurance  Commission  shall  give  the  public 
and  all  insurance  companies  to  be  affected  by  its  orders  or  decisions, 
reasonable  notice  thereof,  not  exceeding  thirty  days,  and  an  opportunity 
to  appear  and  be  heard  with  respect  to  the  same;  which  notice  to  the 
public  shall  be  published  in  one  or  more  daily  papers  of  the  State,  and 
such  notice  to  the  insurance  company  or  companies  to  be  affected  thereby 
shall  be  by  letter  deposited  in  the  postoffice,  addressed  to  the  State  or 
general  agent  of  such  company  or  companies,  if  the  address  of  such  State 
or  general  agent  be  known  to  the  Commission,  or  if  not  known,  then 
such  letter  shall  be  addressed  to  some  local  agent  of  such  company  or 
companies,  or  if  the  address  of  a  local  agent  be  unknown  to  the  Com- 
mission, then  by  publication  in  one  or  more  of  the  daily  papers  of  the 
State,  and  the  Commission  shall  hear  all  protests  or  complaints  from 
any  insurance  company  or  any  citizen  or  any  city,  or  town,  or  village 
or  any  commercial  or  civic  organization  as  to  the  inadequacy  or  unrea- 
sonableness of  any  rates  fixed  by  it  or  approved  by  it,  or  as  to  the  in- 
adequacy or  unreasonableness  of  any  general  basis  schedules  promul- 
gated by  it  or  the  injustice  of  any  order  or  decision  by  it,  and  if  any 
insurance  company,  or  other  person,  or  commercial  or  civic  organiza- 
tion, or  any  city,  town  or  village,  which  shall  be  interested  in  any  such 
order  or  decision,  shall  be  dissatisfied  with  any  regulations,  schedule  or 
rate  adopted  by  such  Commission,  such  company  or  person,  commer- 
cial or  civic  organization,  city,  town  or  village  shall  have  the  right, 
within  thirty  days  after  the  making  of  such  regulation  or  order,  or 
rate,  or  schedule  or  within  thirty  days  after  the  hearing  above  provided 
for,  to  bring  an  action  against  said  Commission  in  the  district  court 
of  Travis  county  to  have  such  regulation  or  order  or  schedule  or  rate 
vacated  or  modified;  and  shall  set  forth  in  a  petition  therefor  the  prin- 
cipal ground  or  grounds  of  objection  to  any  or  all  of  such  regulations, 
schedules,  rates  or  orders;  in  any  such  suit  the  issue  shall  be  formed 
and  the  controversy  tried  and  determined  as  in  other  civil  cases,  and 
the  court  may  set  aside  and  vacate  or  annul  any  one  or  more  or  any 
part  of  any  of  the  regulations,  schedules,  orders  or  rates  promulgated 
or  adopted  by  said  Commission,  which  shall  be  found  by  the  court  to 
be  unreasonable,  unjust,  excessive  or  inadequate  without  disturbing 
others.  No  injunction,  interlocutory  order  or  decree  suspending  or 
restraing  (restraining)  directly  or  indirectly  the  enforcement  of  any 
schedule,  rate,  order  or  regulation  of  said  Commission  shall  be  granted; 
provided,  that  in  such  suit  the  court,  by  interlocutory  order,  may  au- 
thorize the  writing  and  acceptance  of  fire  insurance  policies  at  any  rate 


80  INSURANCE  LAWS  OF  TEXAS. 

which  in  the  judgment  of  the  court  is  fair  and  reasonable,  during  the 
pending  of  such  suit,  upon  condition  that  the  party  to  such  suit  in 
whose  favor  the  said  interlocutory  order  of  said  court  may  be  shall  ex- 
ecute and  file  with  the  Commissioner  of  Insurance  and  Banking  a  good 
and  sufficient  bond  to  be  first  approved  by  said  court,  conditioned  that 
the  party  giving  said  bond  will  abide  the  final  judgment  of  said  court 
and  will  pay  to  the  Commissioner  of  Insurance  and  Banking  whatever 
difference  in  the  rate  of  insurance  it  may  be  finally  determined  to  exist 
between  the  rates  as  fixed  by  said  State  Fire  Insurance  Commission 
complained  of  in  such. suit,  and  the  rate  finally  determined  to  be  fair 
and  reasonable  by  the  court  in  said  suit,  and  the  said  Commissioner  of 
Insurance  and  Banking,  when  he  receives  such  difference  in  money,, 
shall  transmit  the  same  to  the  parties  entitled  thereto. 

Whenever  any  action  shall  be  brought  by  any  company  under  the 
provisions  of  this  section  within  said  period  of  thirty  days,  no  penalties 
nor  forfeitures  shall  attach  or  accrue  on  account  of  the  failure  of  the 
plaintiff  to  comply  with  the  orders,  schedules,  rates  or  regulations  sought 
to  be  vacated  in  such  action  until  the  final  determination  of  the  same. 

Either  party  to  any  such  action,  if  dissatisfied  with  the  judgment  or 
decree  of  said  court,  may  appeal  therefrom  as  in  other  civil  cases.  No- 
action  shall  be  brought  in  any  court  of  the  United  States  to  set  aside 
any  orders,  rates,  schedules  or  regulations  made  by  said  Commission 
under  the  provisions  of  this  act  until  all  of  the  remedies  provided 
herein  shall  have  been  exhausted  by  the  party  complaining.  (Acts  33d 
Leg.,  Chap.  106,  Sec.  21.) 

Company's  Certificate  of  Authority  May  Be  Canceled  for  Violating  Any 
Provision  of  This  Act. 

212.  If  any  insurance  company  affected  by  the  provisions  of  this 
act  shall  violate  any  of  the  provisions  of  this  act,  the  Commissioner  of 
Insurance  shall,  by  and  with  the  consent  of  the  Attorney  General,  can- 
cel its  certificate  of  authority  to  transact  business  in  this  State.     (Acts. 
33d  Leg.,  Chap.  106,  Sec.  21.) 

Rebatings  and  Discrimination  Prohibited. 

213.  No   company  shall  engage  or  participate  in  the  insuring  or 
reinsuring  of  any  property  in  this  State  against  loss  or  damage  by  fire 
except  in  compliance  with  the  terms  and  provisions  of  this  act;  nor 
shall  any  such  company  knowingly  write  insurance  at  any  lesser  rate 
than  the  rates  herein  provided  for,  and  it  shall  be  unlawful  for  any 
company  so  to  do,  unless  it  shall  thereafter  file  an  analysis  of  same 
with  the  Commission,  and  it  shall  be  unlawful  for  any  company,  or  its- 

,  officers,  directors,  general  agents,  State  agents,  special  agents,  local 
agents,  or  its  representatives,  to  grant  or  contract  for  any  special  favor 
or  advantages  in  the  dividends  or  other  profits  to  come  thereon,  or  in 
commissions  in  the  dividends  or  other  profits  to  accrue  thereon,  or  in 
commissions  or  division  of  commission,  or  any  position  or  any  valuable- 
consideration,  or  any  inducement  not  specified  in  the  policy  contract 
of  insurance;  nor  shall  such  company  give,  sell  or  purchase,  offer  ta 
give,  sell  or  purchase,  directly  or  indirectly,  as  an  inducement  to  insure 
or  in  connection  therewith,  any  stocks,  bonds  or  other  securities  of  any 
insurance  company  or  other  corporation,  partnership  or  individual,  or 


INSURANCE  LAWS  OF  TEXAS.  81 

any  dividends  or  profits  accrued  or  to  accrue  thereon,  or  anything  of 
value  whatsoever  not  specified  in  the  policy;  but  nothing  in  this  sec- 
tion or  in  this  act  shall  be  construed  to  prohibit  a  company  from  shar- 
ing its  profits  with  its  policyholders,  provided  that  such  agreement  as 
to  profit-sharing  shall  be  placed  on  or  in  the  face  of  the  policy,  and 
such  profit-sharing  shall  be  uniform  and  shall  not  discriminate  between 
individuals  or  between  classes;  provided,  however,  that  no  part  of  the 
profit  shall  be  paid  until  the  expiration  of  the  policy.  Any  company, 
or  any  of  its  officers,  directors,  general  agents,  State  agents,  special 
agents,  local  agents  or  its  representatives,  doing  any  of  the  acts  in  this 
section  prohibited,  shall  be  deemed  guilty  of  unjust  discrimination; 
provided,  however,  that  if  any  agent  of  (or)  company  shall  issue  a 
policy  without  authority,  and  any  policyholder  holding  such  policy  shall 
sustain  a  loss  or  damage  thereunder,  said  company  or  companies  shall 
be  liable  to  the  policyholder  thereunder,  in  the  same  manner  and  to 
the  same  extent  as  if  said  company  had  been  authorized  to  issue  said 
policies,  although  the  company  issued  said  policy  in  violation  of  the 
provisions  of  this  act.  But  this  shall  not  be  construed  to  give  any 
company  the  right  to  issue  any  contract  or  policy  of  insurance  other 
than  as  provided  in  this  act.  (-Acts  33d  Leg.,  Chap.  106,  Sec.  22.) 

Rebating  and  Discrimination  Prohibited. 

214.  No  person  shall  knowingly  receive  or  accept  from  any  insur- 
ance company  or  from  any  of  its  agents,  sub-agents,  brokers,  solicitors, 
employes,  intermediaries  or  representatives,  or  any  other  person,  any 
rebate  or  premium  payable  on  the  policy,  or  any  special  favor  or  ad- 
vantage in  the  dividends  or  other  financial  profits  accrued  or  to  ac- 
crue thereon,  or  any  valuable  consideration,  position  or  inducement  not 
specified  in  the  policy  of  insurance,  and  any  person  so  doing  shall  be 
guilty  of  a  violation  of  the  provisions  of  this  section,  and  shall  be  pun- 
ished by  a  fine  of  not  exceeding  one  hundred  dollars  ($100.00)  or  by 
imprisonment  in  the  county  jail  for  not  exceeding  ninety  days,  or  by 
both  such  fine  and  imprisonment.     (Acts  33d  Leg.,  Chap.  106,  Sec.  23.) 

Extension  of  Credit  for  Payment  of  Premiums  Not  Forbidden,   and  Is 
Not  Discrimination. 

215.  The  provisions  of  this  law  shall  not  deal  with  the  collection 
of  premiums,  but  each  company  shall  be  permitted  to  make  such  rules 
and  regulations  as  it  may  deem  just  between  the  company,  its  agents, 
and  its  policyholders,  and  no  bona  fide  extension  of  credit  shall  be  con- 
strued as  a  discrimination  or  in  violation  of  the  provisions  of  this  act. 

All  policies  heretofore  issued  or  which  shall  hereafter  be  issued  by 
any  insurance  company  prior  to  the  taking  effect  of  this  act,  which 
provide  that  said  policies  shall  be  void  for  non-payment  of  premiums 
at  a  certain  specified  time,  shall  be  and  the  same  are  in  full  force  and 
effect;  provided,  that  the  company  or  any  of  its  agents,  have  accepted 
the  premium  on  said  policies  after  the  expiration  of  the  dates  named 
in  said  provision  fixing  the  date  of  payment.  (Acts  33d  Leg.,  Chap. 
106,  Sec.  24.) 


82  INSURANCE  LAWS  OF  TEXAS. 

Certificate  of  Authority  of  Company  May  Be  Revoked,  Subject  to  Review 
by  Courts. 

216.  The  Commissioner  of  Insurance  and  Banking,  upon  ascertain- 
ing that  any  insurance   company   or   officer,   agent   or   representative 
thereof,  has  violated  any  of  the  provisions  of  this  act,  may,  at  his  dis- 
cretion, and  with  the  consent  and  approval  of  the  Attorney  General, 
revoke  the  certificate  of  authority  of  such  company,  officer,  agent  or 
representative;  but  such  revocation  of  any  certificate  shall  in  no  man- 
ner affect  the  liability  of  such  company,  officer,  agent  or  representative 
to  the  infliction  of  any  other  penalty  provided  by  this  act,  and  pro- 
vided, that  any  action,  decision  or  determination  of  the  Commissioner 
of  Insurance  and  Banking  and  the  Attorney  General  in  such  cases  shall 
be  subject  to  the  review  of  the  courts  of  this  State  as  herein  provided. 
(Acts  33d  Leg.,  Chap.  106,  Sec.  25.) 

Penalty  for  Violation  of  Any  Provision  of  State  Fire  Commission  Act. 

217.  Any  insurance  company  affected  by  this  act,  or  any  officer  or 
director  thereof,  or  any  agent  or  person  acting  for  or  employed  by  any 
insurance  company,  who,  alone  or  in  conjunction  with  any  corporation, 
company  or  person,  who  shall  wilfully  do  or  cause  to  be  done,  or  shall 
wilfully  suffer  or  permit  to  be  done  any  act,  matter  or  thing  prohibited 
or  declared  to  be  unlawful  by  this  act,  or  who  shall  wilfully  omit  or  fail 
to  do  any  act,  matter  or  thing  required  to  be  done  by  this  act  or  shall 
cause  or  wilfully  suffer  or  permit  any  act,  matter  or  thing  directed  not 
to  be  done,  or  who  shall  be  guilty  of  any  wilful  infraction  of  this  act, 
shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  not  less  than  three  hundred  dollars 
($300.00)    nor  more  than  one  thousand  dollars   ($1000.00)    for  each 
offense.     (Acts  33d  Leg.,  Chap.  106,  Sec.  26.) 

No  Person  Excused  Prom  Testifying;  nor  Subject  to  Penalty  on  Account 
of  Giving  Testimony  Under  Fire  Commission  Act. 

218.  No  person  shall  be  excused  from  giving  testimony  or  produc- 
ing evidence  when  legally  called  upon  to  do  so  at  the  trial  of  any  other 
person  or  company  charged  with  violating  any  of  the  provisions .  of 
this  act  on  the  ground  that  it  may  incriminate  him  under  the  laws 
of  this  State;  but  no  person  shall  be  prosecuted  or  subjected  to  any 
penalty  or  forfeiture  for  or  on  account  of  any  transaction,  matter,  or 
thing,  concerning  which  he  may  testify  or  produce  evidence  under  this 
act  except  for  perjury  in  so  testifying.      (Acts  33d  Leg.,  Chap.   106, 
Sec.  27.) 

Eire  Commission  Act  Does  Not  Apply  to  Mutual  Companies  nor  Recip- 
rocal Associations. 

219.  This  act  shall  not  apply  to  purely  mutual  or  to  purely  profit- 
sharing  fire  insurance  companies  incorporated  or  unincorporated  under 
the  laws  of  this  State,  and  carried  on  by  the  members  thereof  solely 
for  the  protection  of  their  property  and  not  for  profit;  nor  to  purely 
co-operative  inter-insurance  and  reciprocal  exchange  carried  on  by  the 
members  thereof  solely  for  the  protection  of  their  property  and  not  for 
profit.     (Acts  33d  Leg.,  Chap.  106,  Sec.  28.) 


INSURANCE  LAWS  OF  TEXAS.  83 

Additional  Tax  Assessed   and   Collected   for  Meeting   Expenses  of  State 
Fire  Insurance  Commission. 

220.  There  shall  be  assessed  and  collected  by  the  State  of  Texas 
an  additional  one  and  one-fourth   (1J)  per  cent  of  the  gross  fire  in- 
surance premiums  of  all  fire  insurance  companies  doing  business  in 
this  State,  according  to  the  reports  made  to  the  Commissioner  of  In- 
surance and  Banking  as  required  by  law;  and  said  taxes  when  col- 
lected shall  be  placed  in  a  separate  fund  with  the  State  Treasurer  to 
be  expended  during  the  current  year  in  carrying  out  the  provisions  of 
this  act;  provided,  that  such  expenditures,  including  the  salaries  of  the 
members  of  the  Commission,  shall  not  exceed  in  the  aggregate  the  sum 
of  one  hundred  and  thirty  thousand  dollars  ($130,000.00)  per  annum; 
and  should  there  be  an  unexpended  balance  at  the  end  of  any  year, 
the  State  Fire  Insurance  Commission  shall  reduce  the  assessment  for 
the  succeeding  year  so  that  the  amount  produced  and  paid  into  the 
State  Treasury,  together  with  said  unexpended  balance  in  the  Treas- 
ury, will  not  exceed  the  amount  appropriated  for  the  current  year,  to 
pay  all  necessary  expenses  of  maintaining  the  Commission,  which  funds 
shall  be  paid  out  upon  requisition  made  out  and  filed  by  a  majority 
of  the  Commission,  when  the  Comptroller  shall  issue  warrants  therefor. 
(Acts  35th  Leg.,  Chap.  73,  Sec.  5.) 

Note. —  ( 1 )  The  tax  on  gross  premiums  of  fire  insurance  companies  required 
to  be  collected  for  the  support  of  the  State  Fire  Insurance  Commission  must 
be  levied  and  collected  on  the  premiums  on  fire  insurance  only  and  cannot  be 
levied  on  any  other  class  of  insurance.  (Opinion  of  Attorney  General,  Feb- 
ruary 25,  1914.) 

(2)  Insurance  companies  insuring  automobiles  against  fire  must  pay  the  tax 
for  the  support  of  the  State  Fire  Insurance  Commission.  (Opinion  of  Attorney 
General,  March  14,  1915.) 

If  Any  Part  of  State  Fire  Commission  Act,   Declared  Unconstitutional, 
This  Does  not  Affect  Any  Other  Part. 

221.  If  any  part  of  this  act  be  for  any  reason  held  unconstitutional, 
it  shall  not  affect  any  other  portion  or  part  of  this  act.     (Acts  33d  Leg., 
Chap.  106,  Sec.  30.) 


CHAPTEE  X. 

LIVE  STOCK  INSURANCE. 

Must  Have  Capital  Stock  not  Less  Than  $10,000  Paid  in  and  Comply 
With  Laws  Governing  Insurance. 

222.  The  purposes  for  which  private  corporations  may  be  formed 
are:  *  *  *  rjphg  organization  of  fire,  marine,  life  and  live  stock 
insurance  companies;  provided,  that  such  live  stock  insurance  com- 
panies may  be  organized  with  an  authorized  and  paid-up  capital  stock 
of  not  less  than  ten  thousand  dollars  ($10,000.00) ;  and  provided  fur- 
ther, that  all  insurance  companies  mentioned  in  this  subdivision  shall 
be  in  all  other  respects  subject  to  and  shall  comply  with  all  the  provi- 
sions of  Title  71  of  the  Eevised  Statutes  of  Texas.  (E.  S.,  Art.  1121.) 

Note. —  ( 1 )  Live  stock  insurance  companies  must  be  chartered  as  other  in- 
surance companies,  by  filing  charter  in  Department  of  Insurance  and  Banking 


84  INSURANCE  LAWS  OF  TEXAS. 

and    not    with    Secretary   of    State.      (Opinion    of   Attorney    General,    June    13, 
1906.) 

(2)  A  foreign  live  stock  insurance  company  must  have  a  paid-up  capital 
stock  of  at  least  $100,000,  in  order  to  obtain  authority  to  do  business  in  Texas. 
(Opinion  of  Attorney  General,  October  8,  1909.) 


CHAPTEE  XL       • 

CASUALTY  INSURANCE  COMPANIES. 

Who  May  Incorporate  a  Casualty  Insurance  Company — Kinds  of  Insur- 
ance It  May  Do. 

223.  Any  three  (3)  or  more  persons,  a  majority  of  whom  shall  be 
residents  of  the  State  of  Texas,  may  associate  in  accordance  with  the 
provisions  of  this  act,  and  form  an  incorporated  company  for  any  one 
or  more  of  the  following  purposes : 

A.  To  insure  any  person  against  bodily  injury,  disablement  or  death 
resulting  from  accident  and  against  disablement  resulting  from  disease. 

B.  To  insure  against  loss  or  damage  resulting  from   accident  to, 
or  injury  sustained  by,  an  employe  or  other  person  for  which  accident 
or  injury  the  assured  is  liable. 

C.  To  insure*  against  loss  or  damage  by  burglary,  theft  or  house 
breaking. 

D.  To  insure  glass  against  breakage. 

E.  To  insure  against  loss  from  injury  to  person  or  property  which 
results  accidentally  from  steam  boilers,  elevators,  electrical  devices,  en- 
gines and  all  machinery  and  appliances  used  in  connection  therewith 
or  operated  thereby;  and  to  boilers,  elevators,  electrical  devices,  engines, 
machinery  and  appliances. 

F.  To  insure  against  loss  or  damage  by  water  to   any  goods  or 
premises  arising  from  the  breakage  or  leakage  of  sprinkler  and  water 
pipes. 

G.  To  insure  against  loss  resulting  from  accidental  damage  to  auto- 
mobiles, or  caused  accidentally  by  automobiles. 

H.  To  insure  against  loss  or  damage  resulting  from  accident  to, 
or  injury  suffered  by  any  person,  for  which  loss  and  damage  the  in- 
sured is  liable;  excepting  employer's  liability  insurance  as  authorized 
under  subdivision  "B"  of  this  section. 

I.  To  insure  persons,  associations  or  corporations  against  loss  or 
damage  by  reason  of  giving  or  extending  of  credit. 

J.  To  insure  against  loss  or  damage  on  account  of  circumstances 
(incumbrances)  upon  or  defects  in  the  title  to  real  estate  and  against 
loss  by  reason  of  the  non-payment  of  the  principal  or  interest  of  bonds, 
mortgages  or  other  evidences  of  indebtedness. 

K.  To  insure  against  any  other  casualty  or  insurance  risk  specified 
in  the  articles  of  incorporation  which  may  be  lawfully  made  the  subject 
of  insurance;  and  the  formation  of  a  corporation  for  issuing  (insur- 
ing) against  which  is  not  otherwise  provided  for  by  this  act,  excepting 
fire,  marine  and  life  insurance.  (Acts  32d  Leg.,  Chap.  117,  Sec.  1.) 

Note. —  (1)  A  mutual  casualty  insurance  company  cannot  lawfully  be  organ- 
ized in  Texas,  and  a  foreign  mutual  casualty  company  cannot  be  permitted  or 


INSURANCE  LAWS  OF  TEXAS.  85 

licensed  to  do  business  in  Texas,  because  the  laws  of  this  State  have  made  no 
provision  for  such  license.     (Opinion  of  Attorney  General,  March  12,  1914.) 

(2)  A  title  insurance  company,  in  its  policies  insuring  titles,  must  specify 
the  time  during  which  such  policies  are  to  run,  and  cannot  issue  such  a  policy 
without  fixing  a  date  therein  when  the  risk  assumed  shall  cease.      (Opinion  of 
Attorney  General,  February  18,   1915.) 

(3)  A  title  insurance  company  which  owns   an  abstract  plant  for  facilitat- 
ing  its   business   may   likewise   sell   abstracts   to   the  public.      (Opinion   of   At- 
torney General,  February  18,  1915.) 

Requisites  of  Charter. 

224.  Such  persons  shall  associate  themselves  together  by  articles  of 
incorporation  in  writing,  for  the  purpose  of  forming  an  accident  or 
casualty  insurance  company,  which  articles  shall  specify  the  name  by 
which  the  company  shall  be  known,  the  place  in  which  its  principal 
office  will  be  established  or  located,  the  amount  of  its  capital  stock,  the 
general  object  of  the  company  and  the  proposed  duration  of  the  same. 
Any  name  not  previously  in  use  by  any  existing  company  may  be 
adopted.  The  Commissioner  of  Insurance  and  Banking  shall  reject  any 
name  or  title,  when  in  his  judgment  it  too  closely  resembles  that  of 
any  existing  company  or  is  likely  to  mislead  the  public.  (Acts  33d 
Leg.,  Chap.  117,  Sec.  2.) 

Manner   of   Filing    Charter,    Calling   First    Meeting   of    Stockholders    and 
Electing  Board  of  Directors. 

2.25.  When  such  articles  of  incorporation  are  filed  with  the  Com- 
missioner of  Insurance  and  Banking,  together  with  an  affidavit  made 
by  two  or  more  of  its  incorporators  that  all  the  stock  has  been  sub- 
scribed in  good  faith  and  fully  paid  for,  together  with  a  charter  fee  of 
$20.00,  it  shall  be  the  duty  of  the  Commissioner  to  submit  such  articles 
of  incorporation  to  the  Attorney  General  for  examination,  and  if  he 
approves  the  same  as  conforming  with  the  law,  he  shall  (so)  certify 
and  deliver  such  articles  of  incorporation,  together  with  his  certificate 
of  approval  attached  thereto,  to  the  Commissioner  of  Insurance  and 
Banking,  who  shall,  upon  receipt  thereof,  record  the  same  in  a  book 
kept  for  that  purpose,  and  upon  receipt  of  a  fee  of  $1.00  he  shall  fur- 
nish a  certified  copy  of  the  same  to  the  corporators,  upon  which  they 
shall  be  a  body  politic  and  corporate,  and  may  proceed  to  complete  the 
organization  of  the  company,  for  which  purpose  they  shall  forthwith 
call  a  meeting  of  the  stockholders,  who  shall  adopt  by-laws  for  the 
government  of  the  company,  and  elect  a  board  of  directors  not  less  than 
three  composed  of  stockholders,  which  board  shall  haVe  full  control 
and  management  of  the  affairs  of  the  corporation,  subject  to  the  by- 
laws thereof  as  adopted  or  amended  from  time  to  time  by  the  stock- 
holders or  directors,  and  to  the  laws  of  this  State.  (Acts  32d  Leg., 
Chap.  117,  Sec.  3.) 

Corporators  Shall  Elect   Officers  and  Directors,   and   Open  Books   of  Sub- 
scription for  Stock. 

226.  The  subscribers  to  said  articles  of  incorporation  shall  choose 
from  their  number  a  president,  a  secretary,  a  treasurer,  and  such  num- 
ber of  directors,  not  less  than  three  (3)  who  shall  continue  in  office 
for  the  period  of  one  year  from  the  date  of  filing  articles  of  incorpora- 


86  INSURANCE  LAWS  or  TEXAS. 

tion  and  until  their  successors  shall  be  duly  chosen  and  qualified,  as 
hereinafter  provided.  They  shall  open  books  for  the  subscription  of 
stock  in  the  company  at  such  times  and  places  as  they  shall  deem  con- 
venient and  proper,  and  shall  keep  them  open  until  the  full  amount 
specified  in  the  certificate  (charter)  is  subscribed.  (Acts  32d  Leg., 
Chap.  117,  Sec.  4.) 

Capital  Stock — Amount  Required — Must  Be  Fully  Paid  Up  Before  Obtain- 
ing Certificate  of  Authority  to  Do  Business — Cannot  Be  Loaned  to 
Company's  Officer — Company  Must  Also  Deposit  With  State  Treasurer 
$50,000  in  Securities,  and  More  if  Required,  in  Order  to  Do  Business 
in  Another  State — How  Deposit  May  Be  Withdrawn. 

227.  Any  company  organized  under  the  provisions  of  this  act  shall 
have  not  less  than  one  hundred  thousand  dollars  ($100,000.00)  of  cap- 
ital stock  subscribed,  (and  fully)  paid  in,  in  cash,  with  an  additional 
fifty  thousand  dollars  ($50,000.00)  of  capital  stock  subscribed  and  fully 
paid  in,  in  cash,  for  every  kind  of  insurance,  more  than  one  of  which 
it  is  authorized  to  transact  as  specified  in  any  of  the  subdivisions;  pro- 
vided, that  such  companies  with  two  hundred  thousand  dollars  ($200,- 
000.00)  of  capital  stock  subscribed  and  fully  paid  in,  in  cash,  shall  be 
authorized  to  transact  all  and  every  kind  of  insurance  specified  in  any 
and  all  of  the  subdivisions  of  Section  1  of  this  act;  all  of  which  said 
capital  stock  shall  be  paid  up  or  invested  in  bonds  of  the  United  States 
or  of  this  State  or  of  any  county  or  of  any  municipality  of  this  State 
or  in  bonds  or  first  liens  upon  unencumbered  real  estate  in  this  State 
or  in  any  other  State  in  which  such  company  may  previously  have  been 
duly  licensed  to  conduct  an  insurance  business;  and  provided  in  either 
instance  such  real  estate  shall  be  worth  at  least  twice  the  amount  loaned 
thereon.  The  value  of  such  real  estate  shall  be  determined  by  a  val- 
uation made  under  oath  by  two  freeholders  of  the  county  where  the 
real  estate  is  located,  and  if  buildings  are  considered  as  a  part  of  the 
value  of  such  real  estate  they  must  be  insured  for  the  benefit  of  the 
mortgagee.  Upon  such  company  furnishing  evidence  satisfactory  to 
the  Commissioner  of  Insurance  and  Banking  that  the  capital  stock 
as  herein  prescribed  has  been  all  subscribed  and  paid  up  in  cash  in 
good  faith  and  that  such  capital  stock  has  been  invested  as  herein 
prescribed,  and  upon  the  deposit  of  the  sum  of  fifty  thousand  dollars 
($50,000.00)  of  such  securities  or  in  cash  with  the  State  Treasurer, 
then  the  Commissioner  of  Insurance  and  Banking  shall  issue  to  said 
company  a  certificate  authorizing  it  to  do  business.  No  part  of  the 
capital  paid  in  dhall  be  loaned  to  any  officer  of  said  company.  In  the 
event  any  such  company  shall  be  required  by  law  of  any  other  State, 
country  or  province  as  requirement  prior  to  doing  an  insurance  busi- 
ness therein,  to  deposit  with  the  duly  appointed  officer  of  such  other 
State,  county  or  province,  or  with  the  State  Treasurer  of  this  State, 
any  securities  or  cash  in  excess  of  the  said  deposit  of  fifty  thousand 
dollars  ($50,000.00)  hereinbefore  mentioned,  such  company  at  its  dis- 
cretion may  deposit  with  the  State  Treasurer  securities  of  the  character 
authorized  by  this  act,  or  cash,  sufficient  to  enable  it  to  meet  such  re- 
quirements. The  State  Treasurer  is  hereby  authorized  and  directed  to 
receive  such  deposit  and  to  hold  it  exclusively  for  the  protection  of 
all  policyholders  of  the  company.  Any  deposit  so  made  to  meet  the 


INSURANCE  LAWS  OF  TEXAS.  87 

requirements  of  any  such  other  State,  county  or  province  shall  not 
be  withdrawn  by  the  company,  except  upon  filing  with  the  Commis- 
sioner of  Insurance  and  Banking  evidence  satisfactory  to  him  that  the 
company  has  withdrawn  from  business,  and  has  no  unsecured  liabilities 
outstanding  in  any  such  other  State,  county  or  province  by  which  such 
additional  deposit  was  required,  and  upon  the  filing  of  such  evidence 
the  company  may  withdraw  such  additional  deposit  at  any  time.  (Acts 
32d  Leg.,  Chap.  117,  Sec.  5.) 

Note. — A  corporation  chartered  for  the  purpose  of  doing  a  title  insurance 
business  cannot  have  its  capital  stock  paid  in  by  conveying  an  abstract  plant 
or  company  to  the  corporation.  Such  capital  stock  can  only  be  paid  in  in  cash 
or  be  invested  in  bonds  of  the  United  States  or  this  State  or  of  any  county  or 
municipality  of  the  State,  or  in  bonds  or  first  liens  upon  unencumbered  real 
estate.  "Cash"  means  ready  money,  either  in  current  coin  or  legal  tender,  in 
bank  bills  or  checks,  payable  and  receivable  as  money.  (Opinion  of  Attorney 
General,  February  10,  1916.) 

Corporate  Powers  of  the  Company. 

228.  A  corporation  organized  or  doing  business  under  the  provi- 
sions of  this  act  shall,  by  the  name  adopted  by  such  corporation,  in 
law,  be  capable  of  suing  or  being  sued,  and  may  have  the  power  to 
make  or  enforce  contracts  in  relation  to  the  business  of  such  corpora- 
tion; may  have  and  use  a  common  seal,  and  may  change  and  alter  the 
same  at  pleasure,  and  in  the  name  of  the  corporation  or  by  a  trustee 
chosen  by  the  Board  of  Directors,  shall,  in  law,  be  capable  of  taking, 
purchasing,  holding  and  disposing  of  real  and  personal  property  for 
carrying  into  effect  the  purposes  of  their  organization;  and  may  by 
their   Board   of   Directors,   trustees   or   managers,   make   by-laws   and 
amendments  thereto,  not  inconsistent  with  the  laws  or  the  Constitu- 
tion of  the  State,  or  of  the  United  States,  which  by-laws  shall  define 
the  manner  of  electing  directors,  trustees  or  managers  and  officers  of 
such  corporations,  together  with  the  qualifications  and  duties  of  the 
same  and  fixing  the  term  of  office.     (Acts  32d  Leg.,  Chap.  117,  Sec.  6.) 

Annual  Statement  Bequired  to  Be  Filed. 

229.  The  president,  vice-president,  and  secretary,  or  a  majority  of 
directors  or  trustees  of  such  company,  organized  under  the  provisions 
of  this  act,  shall  annually,  on  the  first  day  of  January,  or  within  sixty 
days  thereafter,  prepare  and  deposit  in  the  office  of  the  Commissioner 
of  Insurance  and  Banking  a  verified  statement  of  the  condition  of  such 
company  on  the  31st  day  of  December  of  the  preceding  year,  showing: 

First.  Name  and  where  located,  (a)  Names  of  officers,  (b)  The 
amount  of  capital  stock,  (c)  The  amount  of  capital  stock  paid  in. 

Second.  Assets,  (a)  The  value  of  real  estate  owned  by  said  com- 
pany, (b)  The  amount  of  cash  on  hand,  (c)  The  amount  of  cash 
deposited  in  bank  or  trust  company,  (d)  The  amount  of  bonds  of 
the  United  States,  and  all  other  bonds,  giving  names  and  amounts, 
with  par  and  market  values  of  each  kind,  (e)  The  amount  of  loans 
secured  by  first  mortgage  on  real  estate,  (f )  The  amount  of  all  other 
bonds,  loans  and  how  secured,  with  rate  of  interest,  (g)  The  amount 
of  notes  given  for  unpaid  stock  and  how  secured,  (h)  The  amount 
of  interest  due  and  unpaid,  (i)  All  other  credits  or  assets. 


88  INSURANCE  LAWS  OF  TEXAS. 

Third.  Liabilities,  (a)  The  amount  of  losses  due  and  unpaid, 
(b)  The  amount  of  claims  for  losses  unadjusted,  (c)  The  amount 
of  claims  for  losses  resisted. 

Fourth.  Income  during  the  year,  (a)  The  amount  of  fees  re- 
ceived during  the  year,  (b)  The  amount  of  interest  received  from 
all  sources,  (c)  The  amount  of  receipts  from  all  other  sources. 

Fifth.  Expenditures  during  the  year,  (a)  The  amount  paid  for 
losses,  (b)  The  amount  of  dividends  paid  to  stockholders,  (c)  The 
amount  of  commissions  and  salaries  paid  to  agents,  (d)  The  amount 
paid  to  officers  for  salaries,  (e)  The  amount  paid  for  taxes,  (f)  The 
amount  of  all  other  payments  or  expenditures. 

Sixth.  Miscellaneous,  (a)  The  amount  paid  in  fees  during  the 
year,  (b)  The  amount  paid  for  losses  during  the  year,  (c)  The 
whole  amount  of  insurance  issued  and  in  force  on  the  31st  day  of  De- 
cember of  the  previous  year.  (Acts  32d  Leg.,  Chap.  117,  Sec.  7.) 

Commissioner  May  Amend  Annual  Statement  Form. 

230.  The  Commissioner  of  Insurance  and  Banking  is  authorized  to 
amend  the  form  of  statement  and  to  exact  such  additional  informa- 
tion as  he  may  think  necessary  in  order  that  a  full  exhibit  of  the  stand- 
ing of  the  companies  organized  and  doing  business  under  this  act  may 
be  shown.     (Acts  32d  Leg.,  Chap.  117,  Sec.  8.) 

Company  Cannot  Issue  Policy  Until  Deposit  Is  Made  and  Annual  State- 
ment Filed. 

231.  Upon  the  failure  of  any  company  organized  or  doing  business 
under  this  act  to  make  the  deposit  or  to  file  the  statement  in  time  as 
stated  in  the  preceding  section,  the  Commissioner  of  Insurance   and 
Banking  shall  notify  such  company  to  issue  no  new  insurance  until 
there  should  have  been  a  compliance  with  said  requirements,  and  it 
shall  be  unlawful  for  any  such  company  to  thereafter  issue  any  policy 
of  insurance  until  such  requirements  shall  be  complied  with.      (Acts 
32d  Leg.,  Chap.  117,  Sec.  9.) 

Commissioner  May  Examine  Company. 

232.  The   Commissioner   of   Insurance   and   Banking  may   at   any 
time  make  a  personal  examination  of  the  books,  papers  and  securities 
of  any  company  organized  and  doing  business  under  the  provisions  of 
this  act,  or  may  authorize  or  empower  any  other  suitable  person  to 
make  such  examinations,  and  for  the  purpose  of  securing  a  full  and 
true  exhibit  of  its  affairs,  he  or  the  person  selected  by  him  shall  have 
power  to  examine  under  oath  any  officer  of  said  company  relative  to 
its  business  management.     (Acts  32d  Leg.,  Chap.  117,  Sec.  10.) 

Commissioner  Must  Revoke  Certificate  of  Authority  for  Failure  to  Com- 
ply With  the  Law,  and  Refer  Facts  to  Attorney  General. 

233.  If  the  Commissioner  of  Insurance  and  Banking  shall  at  any 
time  (find)  from  the  report  or  examination  that  the  company  has  not 
complied  with  the  provisions  of  this  act,  he  shall  revoke  its  certificate 
of  authority  to  do  business  in  this  State  and  shall  refer  the  facts  to 
the  Attorney  General,  who  shall  proceed  to  ask  the  proper  court  to 
appoint  a  receiver  for  said  company,  who  shall  under  the  direction  of 


INSURANCE  LAWS  OF  TEXAS.  89 

the  court  wind  up  the  affairs  of  said  company.  But  in  no  other  way 
can  the  Commissioner  of  Insurance  and  Banking,  or  any  other  person, 
restrain  or  interfere  with  the  prosecution  of  business  of  any  company 
doing  business  under  the  provisions  of  this  act,  except  in  actions  by 
judgment  creditor  or  in  proceedings  supplementary  to  execution.  (Acts 
32d  Leg.,  Chap.  117,  Sec.  11.) 

Note. — The  insolvency  of  an  insurance  company  is  a  breach  of  its  contract 
to  each  existing  policyholder,  upon  the  occurrence  of  which  the  policyholder  is 
entitled  to  recover  a  portion  of  the  premium  paid  which  is  unearned  at  the 
time  of  the  insolvency.  Upon  such  a  company  going  into  the  hands  of  a  receiver 
the  proper  course  for  the  claimant  of  a  premium  is  to  file  his  claim  in  the 
receivership  proceedings,  and  have  the  same  allowed  in  due  course  and  ordered 
paid  by  the  court.  (Opinion  of  Attorney  General,  March  22,  1916.) 

Securities  on  Deposit  May  Be  Withdrawn  by  Substituting  Others. 

234.  Companies  organized  under  the  provisions  of  this  act  shall  have 
the  right  at  any  time  to  change  their  securities  on  deposit  with  the 
State  Treasurer,  by  substituting  for  those  withdrawn  a  like  amount  in 
other  securities  of  the  character  provided  for  in  this  act.     (Acts  32d 
Leg.,  Chap.  117,  Sec.  12.) 

How  Capital  Stock  May  Be  Increased. 

235.  Any  company  organized  under  the  provisions  of  this  act  may 
increase  the  capital  stock  of  the  same  at  any  time  after  the  intention 
to  so  increase  the  capital  stock  shall  have  been  ratified  by  a  two-thirds 
vote  of  the  stockholders  and  after  notice  of  the  purpose  to  so  increase 
the  capital  stock  has  been  given  by  publication  in  some  newspaper  of 
general  circulation  for  the  period  of  four  consecutive  weeks;  but  no 
increase  of  capital  stock  in  less  amount  than  fifty  thousand  dollars 
($50,000.00)  is  hereby  authorized.    (Acts  32d  Leg.,  Chap.  117,  Sec.  13.) 

Dividends  May  Be  Declared  From  Surplus  Profits  Only,   and  at  End  of 
Year. 

236.  The  directors  of  any  company  organized  under  this  act  shall 
not  make  any  dividends  except  from  the  surplus  profit  arising  from 
their  business.     No  dividends  shall  be  declared  except  at  the -close  of 
the  year  an<J  at  the  time  when,  by  law,  the  company  is  required  to  file 
its  annual  statement  with  the  Commissioner  of  Insurance  and  Bank- 
ing.    (Acts  32d  Leg.,  Chap.  117,  Sec.  14.) 

State  Treasurer  May  Permit  Collections  of  Interest  on  Deposited  Securi- 
.      ties. 

237.  The  State  Treasurer  shall  permit  companies  having  securities 
on  deposit  with  him  under  the  provisions  of  this  act  to  collect  the  in- 
terest as  the  same  may  become  due  and  shall  deliver  to  such  companies, 
respectively,  the  coupons  or  other  evidences  of  interest  pertaining  to 
such  deposits;  provided,  however,  that  upon  failure  of  any  company  to 
deposit  additional  security  as  called  for  by  the  Commissioner  of  Insur- 
ance and  Banking,  or  pending  any  proceeding  to  close  up  or  enjoin 
it,  the  State  Treasurer  shall  collect  the  interest  as  it  becomes  due,  and 
hold  the  same  as  additional  security  in  his  hands  belonging  to  such 
company.     (Acts  32d  Leg.,  Chap.  117,  Sec.  15.) 


90  INSURANCE  LAWS  OF  TEXAS. 

Forfeit  for  Writing  New  Business  Without  Certificate. 

238.  Any  company  organized  or  doing  business  under  this  act  with- 
out a  certificate,  as  provided  for  in  this  act,  shall  forfeit  one  hundred 
dollars  ($100.00)  for  every  day  it  continues  to  write  new  business  in 
this  State  without  such  certificate.     (Acts  32d  Leg.,  Chap.  117,  Sec.  16.) 

Venue  for  Penalty  Suits. 

239.  Suit  brought  to  recover  any  of  the  penalties  provided  for  in 
this  act  shall  be  instituted  in  the  name  of  the  State  of  Texas,  by  the 
Attorney  General  or  by  a  district  or  county  attorney  under  his  direc- 
tion, either  in  the  county  where  the  principal  office  is  situated  or  in 
the  county  of  Travis.     Such  penalties,  when  recovered,  shall  be  paid 
into  the  State  Treasury  for  the  use  of  the  school  fund.      (Acts  32d 
Leg.,  Chap.  117,  Sec.  17.) 

Securities  in  Which  Company's  Surplus  Funds  Must  Be  Invested. 

240.  No  company  organized  under  the  provisions  of  this  act  shall 
invest  its  funds  over  and  above  its  paid-up  capital  stock  in  any  other 
manner  than  as  follows: 

(a)  In  bonds  of  the  United  States,  or  of  any  of  the  States  of  the 
United  States  which  are  at  or  above  par. 

(b)  In  bonds  or  first  liens  on  unencumbered  real  estate  in  this 
State  or  in  any  other  State,  county  or  province,  in  which  such  com- 
pany may  be  duly  licensed  to  conduct  an  insurance  business,  and  pro- 
viding in  each  instance  such  real  estate  shall  be  worth  at  least  twice 
the  amount  loaned  thereon.     The  value  of  such  real  estate  shall  be  de- 
termined by  a  valuation  made  under  oath  by  two  freeholders  of  the 
county  where  the  real  estate  is  located,  and  if  buildings  are  considered 
as  a  part  of  the  value  of  such  real  estate  they  must  be  insured  for  the 
benefit  of  the  mortgagee. 

(c)  In  bonds  or  other  interest-bearing  evidences  of  indebtedness 
of  any  county,  incorporated  city,  town  or  school  or  sanitary  district 
within  this  State,  or  in  any  other  State,  county  or  province  in  which 
said  company  may  be  duly  licensed  to  conduct  an  insurance  business, 
and  provided  that  such  bonds  or  other  evidences  of  indebtedness  are 
issued  by  authority  of  law  and  that  interest  upon  them  h£s  never  been 
defaulted. 

(d)  In  the  stocks  or  bonds  or  other  evidences  of  indebtedness  of 
any  solvent  dividend-paying  corporation  incorporated  under  the  laws 
of  this  State,  or  of  the  United  States  or  of  any  State,  county  or  prov- 
ince in  which  such  company  may  be  duly  licensed  to  conduct  an  in- 
surance business. 

(e)  In  loans  upon  the  pledge  of  any  mortgage,  stock  or  bonds,  or 
.other  evidence  of  indebtedness,   acceptable  as  investments  under  the 

terms  of  this  act,  if  the  current  value  of  such  mortgage,  stock,  bond  or 
other  evidence  of  indebtedness  is  at  least  twenty-five  per  cent  (25%) 
more  than  the  amount  loaned  thereon.  (Acts  32d  Leg.,  Chap.  117, 
Sec.  18.) 

Purposes  for  Which  Company  May  Purchase,  Hold  or  Convey  Real  Estate. 

241.  No  company  organized  under  this  act  shall  be  permitted  to 


INSURANCE  LAWS  OF  TEXAS.  91 

purchase,  hold  or  convey  real  estate,  except  for  the  purpose  and  in  the 
manner  herein  set  forth: 

First.  For  the  erection  and  maintenance  of  buildings  at  least  ample 
and  adequate  for  the  transaction  of  its  own  business. 

Second.  Such  as  shall  have  been  mortgaged  to  it  in  good  faith  for 
money  due. 

Third.  Such  as  shall  have  been  conveyed  to  it  in  the  satisfaction  of 
debts  previously  contracted  in  the  course  of  its  dealings,  and  which 
must  be  taken  in  by  the  company  on  account  of  the  debts  secured  by 
such  mortgage. 

Fourth.  Such  as  shall  have  been  purchased  at  sales  upon  judgments, 
decrees  or  mortgages  obtained  or  made  for  such  debts.  And  no  com- 
pany incorporated  as  aforesaid  shall  purchase,  hold  or  convey  real  estate 
in  any  other  cases  or  for  any  other  purpose.  (Acts  32d  Leg.,  Chap. 
117,  Sec.  19.) 

Heal  Estate  Must  Be  Disposed  of  in  Ten  Years,  Unless  for  Special  Reason 
Time  Is  Extended  by  Commissioner. 

24:2.  All  real  estate  acquired  as  aforesaid,  except  such  as  is  occupied 
by  buildings  used  in  whole  or  in  part  for  the  accommodation  of  such 
companies  in  the  transaction  of  its  business,  shall,  except  as  herein- 
after provided,  be  sold  and  disposed  of  within  ten  years  after  such 
company  shall  have  acquired  title  to  the  same.  No  such  company  shall 
have  such  real  estate  for  a  longer  period  than  that  above  mentioned 
unless  the  said  company  shall  procure  a  certificate  from  the  Commis- 
sioner of  Insurance  and  Banking  that  the  interests  of  the  company 
will  suffer  materially  by  a  forced  sale  of  such  real  estate,  in  which 
event  the  time  for  the  sale  may  be  extended  to  such  time  as  the  Com- 
missioner of  Insurance  and  Banking  shall  direct  in  said  certificate. 
(Acts  32d  Leg.,  Chap.  117,  Sec.  20.) 

Commissioner  Shall  Issue  Certificate  of  Authority  to  Do  Business. 

243.  The  Commissioner  of  Insurance  and  Banking,  upon  due  proof 
by  a  company  organized  under  the  provisions  of  this  act,  of  its  pos- 
sessing the  qualifications  required,  shall  issue  a  certificate  setting  forth 
that  it  has  qualified  and  is  authorized  for  the  ensuing  year  to  do  busi- 
ness under  these  statutes,  which  certificate,  or  a  copy  thereof,  shall  be 
evidence  of  such  qualification  and  of  the  company's  authority  to  trans- 
act business  authorized  by  this  act,  mentioned  in  the  preceding  sec- 
tions, and  of  its  solvency  and  credit.      (Acts   32d  Leg.,   Chap.   117, 
Sec.  21.) 

This  Act  Applies  Only  to  Companies  Organized  Under  It. 

244.  Only  companies  organized  and  doing  business  under  the  pro- 
visions of  this  act  shall  be  subject  to  its  provisions.     (Acts  32d  Leg., 
Chap.  117,  Sec.  22.) 

Fees  Charged  Under  This  Act. 

245.  The  Commissioner  of  Insurance  and  Banking  shall  charge  for 
filing  the  preliminary  statement  or  for  filing  the  annual  statement  re- 
quired by  the  provisions  of  this  act,  a  fee  of  ten  dollars;  and  for  each 


92  INSURANCE  LAWS  OF  TEXAS. 

certificate  and  seal  he  shall  charge  a  fee  of  one  dollar.      (Acts  32d 
Leg.,  Chap.  117,  Sec.  23.) 

Legal  Process — How  Served. 

246.  Proceed  (process)  in  any  civil  suit  against  any  casualty  com- 
pany organized  under  the  laws  of  this  State  may  be  served  only  on  the 
president,  or  any  active  vice-president,  or  secretary,  or  general  counsel, 
residing  at  the  city  of  the  home  office  of  the  company,  or  by  leaving  a 
copy  of  same  at  the  home  office  of  such  company  during  business  hours. 
(Acts  32d  Leg.,  Chap.  117,  Sec.  24.) 

Company  May  Decrease  Capital  Stock. 

247.  Any  company  organized  under  the  provisions  of  this  act  may 
decrease  the  capital  stock  of  same  at  any  time  after  the  intention  to  so 
decrease  the  capital  stock  shall  have  been  ratified  by  a  majority  vote 
of  the  stockholders  and  after  notice  of  the  purpose  to  so  decrease  the 
capital  stock  has  been  given  by  publication  in  some  newspaper  of  gen- 
eral circulation  for  a  period  of  four  consecutive  weeks.     (Acts  32d  Leg., 
Chap.  117,  Sec.  25.) 

This  Act  Cumulative  and  Repeals  No  Other  Law. 

248.  This  act  is  cumulative  as  to  insurance  legislation  in  this  State, 
and  as  to  the  mode  and  manner  of  organizing  and  doing  insurance 
business  in  this  State,  and  shall  not  be  construed  to  repeal  any  law 
now  in  force  in  this  State.     (Acts  32d  Leg.,  Chap.  117,  Sec.  26.) 


CHAPTER  XII. 

FIDELITY,  GUAEANTY  AND  SURETY  COMPANIES. 

Home  Companies  May  Be  Incorporated. 

249.  Private  corporations  may  be  created  by  the  voluntary  associa- 
tion of  three  or  more  persons  for  the  purposes  and  in  the  manner  herein- 
after mentioned.     (R.  S.,  Art.  1120.) 

To  Act  as  Surety  or  Guarantor,   Trustee,   Assignee,   Executor,   Adminis- 
trator, Etc. 

250.  Private  corporations  may  be  created  to  act  as  trustee,  assignee, 
executor,  administrator,  guardian,  and  receiver,  when  designated  by  any 
person,  corporation  or  court  to  do  so,  and  to  do  a  general  fiduciary  and 
depository  business;  to  act  as  surety  and  guarantor  of  the  fidelity  of 
employes,  trustees,  executors,   administrators,  guardians  or  others  ap- 
pointed to,  or  assuming  the  performance  of  any  trust,  public  or  private, 
under  appointment  of  any  court  or  tribunal,  or  under  contract  between 
private  individuals  or  corporations;  also  upon  any  bond  or  bonds  that 
may  be  required  to  be  filed  in  any  judiciary  proceeding;  also  to  guar- 
antee any  contract  or  undertaking  between  individuals,  or  beiween  pri- 
vate corporations,  or  between  individuals  or  private  corporations,  and 
the  State  and  municipal  corporations  or  counties,  or  between  corpo- 
rations and  individuals;  to  act  as  executor  and  testamentary  guardian 
when  designated  by  such  decedents;  or  to  act  as  administrator  or  guar- 


INSURANCE  LAWS  OF  TEXAS.  93 

dian  when  appointed  by  any  court  having  jurisdiction;  also,  on  any 
bond  or  bonds  that  may  be  required  of  any  State  official,  district  official, 
county  official  or  official  of  any  school  district  or  of  any  municipality; 
provided,  that  the  commissioners  court  of  each  county  shall  have  the 
right  to  reject  any  or  all  official  bonds  made  by  surety  companies  and 
in  their  discretion  may  require  any  or  all  officials  to  make  their  official 
bonds  by  personal  sureties;  provided,  also,  that  any  such  bond  may  be 
accepted  and  approved  by  the  officer  charged  by  law  with  the  duty  of 
accepting  and  approving  the  same  without  being  signed  by  other  securi- 
ties than  such  corporation,  and  provided  further,  that  when  any  such 
bond  shall  exceed  fifty  thousand  dollars  in  penal  sum,  the  officer  or  offi- 
cers charged  by  law  with  the  duty  of  approving  and  accepting  such 
bond  may  require  that  such  bond  be  signed  by  two  or  more  surety  com- 
panies, or  by  one  surety  company  and  two  or  more  good  and  sufficient 
personal  sureties,  in  the  discretion  of  the  principal  or  official  of  whom 
the  bond  is  required,  and  any  statute  or  law  to  the  contrary,  or  requir- 
ing any  such  bonds  to  be  signed  by  two  or  more  good  and  sufficient  sure- 
ties, shall  be  governed  and  controlled  by  the  provisions  of  this  article — 
provided,  also,  that  each  corporation,  making  or  offering  to  make  any 
bond  under  this  article,  shall  publish  in  some  newspaper  of  general  cir- 
culation in  the  county  where  such  company  is  organized  or  has  its  prin- 
cipal office  on  the  first  day  of  February  of  each  year,  a  statement  of  its 
condition  on  the  previous  thirty-first  day  of  December,  showing  under 
oath  its  assets  and  liabilities  that  a  copy  of  said  statement  be  filed  with 
the  Commissioner  of  Insurance  and  Banking  before  the  first  of  March 
of  the  year  following,  and  a  fee  of  $25  be  paid  to  that  officer  for  filing 
the  same,  and  that  an  examination  of  its  affairs  may  be  made  at  any 
time  by  the  Commissioner  of  Insurance  and  Banking;  such  examina- 
tion to  be  at  the  expense  of  the  company;  provided,  that  said  corpora- 
tion organized  under  the  provisions  of  this  article  shall  have  a  paid-up 
capital  stock  of  not  less  than  $100,000,  and  shall  keep  on  deposit  with 
the  State  Treasurer  money,  bonds  or  other  securities  in  an  amount  not 
less  than  $50,000;  and  said  securities  be  approved  by  the  Commissioner 
of  Insurance  and  Banking,  and  that  this  amount  be  kept  intact  at  all 
times.  And  further  providing  that  all  foreign  corporations  transacting 
the  business  of  a  guaranty  and  fidelity  company  in  this  State  file  with 
the  Commissioner  of  Insurance  and  Banking  an  affidavit  showing  that 
such  foreign  company  has  on  deposit  with  the  State  Treasurer  of  its 
home  State  $100,000  or  more,  in  money,  bonds  or  other  securities  for 
the  protection  of  its  policyholders.  (E.  S.,  Art.  4928,  as  amended  by 
Sec.  1,  Chap.  66,  Gen.  Laws,  33d  Leg.)' 

Note. —  ( 1 )  A  corporation  organized  for  the  purpose  of  erection  or  repair  of 
any  building  or  improvement,  accumulation  and  loaning  of  money  for  said  pur- 
poses, for  the  purchase,  sale  and  subdivision  of  real  property;  to  act  as  a 
trustee,  assignee,  executor,  administrator,  guardian  or  receiver,  to  do  a  general 
fiduciary  and  depository  business,  to  act  as  surety  and  guarantor  of  the  fidelity 
of  employes,  go  on  bonds  required  in  any  judicial  proceedings,  to  act  as  ex- 
ecutor and  testamentary  guardian,  to  act  as  administrator  or  guardian  when 
appointed  by  court.  Held,  that  a  deposit  of  $50,000  must  be  made.  (Attorney 
General's  opinion,  June  9,  1898.) 

(2)  The  deposit  by  a  company  under  above  law  may  be  made  by  depositing 
its  own  bonds  secured  by  mortgage  on  its  own  property.  (Attorney  General's 
opinion,  October  24,  1901.) 


94  INSURANCE  LAWS  OF  TEXAS. 

(3)  A  company  for  the  purpose  of   acting  "as   trustee,   assignee,    executor, 
administrator,  guardian  or  receiver,  when  designated  by  any  person,   corpora- 
tion or  court  so  to  do  and  to  do  a  general  fiduciary  and  depository  business," 
must  make  and  publish  annual  statement  as  prescribed  in  above  section   and 
pay  the  fee  for  filing  same;  but  such  a  company  is  not  a  guaranty  and  fidelity 
company,  and  is  not  required  to  make  the  deposit  mentioned.     Any  company, 
however,  before  doing  a  guaranty,  fidelity  or  surety  business  must  make  such 
deposit  in  order  to  obtain  a  certificate  of  authority  to  do  such  business.      (At- 
torney General's  opinion,  November  11,  1905.) 

(4)  A  company  organized  for  the  purpose  of  doing  business  as  prescribed  in 
above  section,  may  lawfully  be  licensed  if  it  has  a  paid-up  capital  of  $100,000, 
notwithstanding  its  charter  authorizes  it  to  have  a  capital   in  excess  of  that 
amount.      (Opinion  of  Attorney  General,  August  29,  1910.) 

(5)  A  company  organized  under  the  laws  of  another  State,  whose  charter 
authorizes  it  to  do  the  kinds  of  business  mentioned  in  above  section  as  well  as 
other  kinds  of  insurance,  may  be  licensed  to  do  the  business  mentioned  in  said 
section  if  it  has  a  paid-up  capital  of  $100,000,  although  it  has  a  larger  author- 
ized capital;   but  if  it  does  any  other  class  of  business,   its  entire  authorized 
capital  must  be  first  paid  up.     (Opinion  of  Attorney  General,  August  29,  1910.) 

(6)  A  company  organized  under  the  above  section,  before  doing  a  fidelity 
or  surety  business,  must  deposit  the  securities  as  therein  mentioned;    but  it 
may  do  the  other  kinds  of  insurance  business  as  provided  in  its  charter,  except 
fidelity  and  surety,  without  being  required  to  make  the  deposit.      (Opinion  of 
Attorney  General,  December  30,  1910.) 

(7)  A  corporation  organized  under  the  laws  of  the  State  of  Texas  in  Sec- 
tion 37,  Chapter  130,  General  Laws  Twenty-fifth  Legislature,  as  amended  by 
Section  1,  Chapter  127,  General  Laws  of  Twenty -eighth  Legislature,  K.  S.,  Art. 
4928,  and  whose  charter  authorizes  it  to  do  a  general  surety  business  and  make 
fidelity  bonds,  should  obtain  a  license  from  the  Commissioner  of  Insurance  and 
Banking,  and  comply  with  all  the  laws  governing  fidelity,  surety  and  guaranty 
companies  doing  business  in  Texas.      (Opinion  of  Attorney  General,  December 
2,  1912.) 

(8)  A  certificate  of  deposit  is  "Securities"  within  the  meaning  of  the  law, 
and  may  be  deposited  by  a  bonding  and  surety  company  in  the  State  Treasury. 
(Opinion  of  Attorney  General,  April  19,  1913.) 

(9)  Corporate  surety  companies  may  become  sureties  on  bonds  of  all  State 
and   county   officers,   including  tax  collectors.      (Opinion  of  Attorney   General, 
June  12,  1914.) 

Bonds,  Undertakings,  Obligations,  Recognizances  or  Guaranties  May  Be 
Executed  by  Surety  Companies. 

251.  Whenever  any  bond,  undertaking,  recognizance  or  other  obli- 
gation is,  by  law  or  charter,  ordinances,  rules  and  regulations  of  a 
municipality,  board,  body,  organization,  court,  judge  or  public  officer, 
required  or  permitted  to  be  made,  given,  tendered  or  filed,  and  when- 
ever the  performance  of  any  act,  duty  or  obligation,  or  the  refraining 
from  any  act,  is  required  or  permitted  to  be  guaranteed,  such  bond,  un- 
dertaking, obligation,  recognizance  or  guarantee  may  be  executed  by  a 
surety  company,  qualified  as  hereinbefore  provided;  and  such  execution 
by  such  company  of  such  bond,  undertaking,  obligation,  recognizance 
or  guaranty  shall  be  in  all  respects  a  full  and  complete  compliance  with 
every  law,  charter,  rule  or  regulation  that  such  bond,  undertaking,  obli- 
gation, recognizance  or  guaranty  shall  be  executed  by  one  surety  or  by 
one  or  more  sureties,  or  that  such  sureties  shall  be  residents,  or  house- 
holders, or  freeholders,  or  either,  or  both,  or  possess  any  other  qualifica- 
tion and  all  courts,  judges,  heads  of  departments,  boards,  bodies,  munici- 
palities, and  public  officers  of  every  character,  shall  accept  and  treat 
such  bond,  undertaking,  obligation,  recognizance  or  guaranty,  when  so 


INSURANCE  LAWS  OF  TEXAS.  95 

executed  by  such  company,  as  conforming  to,  and  fully  and  completely 
complying  with,  every  requirement  of  every  such  law,  charter,  ordinance, 
rule  and  regulation;  and  provided  any  suit  on  any  bond  issued  under 
Articles  4928  and  4929,  shall  be  brought  at  the  place  provided  by 
Article  4934,  Eevised  Statutes,  1911,  and  if  the  corporation  issuing  the 
bond  sued  on  has  no  agent  in  the  county  where  said  bond  was  issued 
then  the  Commissioner  of  Insurance  and  Banking  of  this  State  is  made, 
by  consent  of  said  company,  its  agent  on  whom  service  of  process  may 
be  held.  (E.  S.,  Art.  4929,  as  amended  by  Section  1,  Chap.  66,  33d  Leg.) 

A  General  Deposit  for  Benefit  of  All  Creditors. 

252.  Requirements  to  Be  Complied  With. — Such  company,  to  be 
qualified  to  so  act  as  surety  or  guarantor,  must  comply  with  the  re- 
quirements of  every  law  of  this  State  applicable  to  such  company  doing 
business  therein,  must  be  authorized  under  the  laws  of  the  State  where 
incorporated,  and  under  its  charter,  to  become  surety  upon  such  bond, 
undertaking,  obligation,  recognizance  or  guaranty,  must  have  a  fully 
paid  up  and  safely  invested  and  unimpaired  capital  of  at  least  one  hun- 
dred thousand  dollars;  must  have  good  available  assets  exceeding  its 
liabilities,  which  liabilities  for  the  purpose  of  this  chapter  shall  be  taken 
to  be  its  capital  stock,  its  outstanding  debts  and  a  premium  reserve  at 
the  rate  of  50  per  centum  of  the  current  annual  premiums  on  each  out- 
standing bond,  undertaking,  recognizance  and  obligations  of  like  char- 
acter in  force;  must  file  with  the  Commissioner  of  Insurance,  Statistics, 
History  and  Agriculture  (Commissioner  of  Insurance  and  Banking)  a 
certified  copy  of  its  certificate  of  incorporation,  a  written  application 
to  be  authorized  to  do  business  under  this  chapter,  and,  also,  with  such 
application,  and  in  each  year  thereafter  a  statement,  verified  under  oath, 
made  up  to  December  31,  preceding,  stating  the  amount  of  its  paid-up 
cash  capital,  particularizing  each  item  of  investment,  the  amount  of 
premiums  upon  existing  bonds,  undertakings,  recognizances  and  obliga- 
tions of  like  character  in  force  upon  which  it  is  surety;  the  amount  of 
liability  for  unearned  portion  thereof  estimated  at  the  rate  of  50  per 
centum  of  the  current  annual  premiums  on  each  such  bond,  undertaking, 
recognizance  and  obligation  in  force,  stating  also  the  amount  of  its  out- 
standing debts  of  all  kinds,  and  such  further  facts  as  may  be  by  the 
laws  of  this  State  required  of  such  company  in  transacting  business 
therein ;  and,  if  such  company  be  organized  under  the  laws  of  any  other 
State  than  this  State,  it  must  also  have  on  deposit  with  a  State  officer 
of  one  of  the  States  of  the  United  States,  not  less  than  one  hundred  thou- 
sand dollars  in  good  securities,  deposited  with  and  held  by  such  officer 
for  the  benefit  of  the  holders  of  all  its  obligations  wheresoever  incurred ; 
must  also  appoint  an  attorney  in  this  State  upon  whom  process  of  law 
can  be  served,  which  appointment  shall  continue  until  revoked  or  another 
attorney  substituted,  and  must  file  with  the  Commissioner  of  Insurance, 
Statistics  and  History  and  Agriculture  (Commissioner  of  Insurance  and 
Banking)  written  evidence  of  such  appointment,  which  shall  state  the 
residence  and  office  of  such  attorney;  and  such  service  of  process  may 
also  be  made  upon  the  Commissioner  of  Insurance  of  this  State  by 
virtue  of  his  office,  and  shall  be  as  effective  as  if  made  upon  said  at- 
torney; and  must,  also,  have  on  deposit  with  the  Treasurer  of  this  State 


96  INSURANCE  LAWS  or  TEXAS. 

at  least  fifty  thousand  dollars  in  good  securities  worth  at  par  and  market 
value  at  least  that  sum  of  the  value  of  which  securities  the  Commis- 
sioner of  Insurance  shall  judge,  held  for  the  benefit  of  the  holders  of 
all  the  obligations  of  such  company  wheresoever  incurred;  said  securi- 
ties so  deposited  with  said  Treasurer  to  remain  with  him  in  trust  to 
answer  any  default  of  said  company  as  surety  upon  any  such  bond,  under- 
taking, recognizance  or  other  obligations  established  by  final  judgment 
in  whatsoever  court  and  wheresoever  rendered  upon  which  execution  may 
lawfully  be  issued  against  said  company;  said  Treasurer  and  his  suc- 
cessors in  office  being  hereby  directed  to  so  receive  and  hereafter  retain 
such  deposit  under  this  act  in  trust  for  the  purposes  hereof;  such  com- 
pany, however,  at  all  times  to  have  the  right  to  collect  the  interest,  divi- 
dends and  profits  upon  such  securities,  and,  from  time  to  time,  to  with- 
draw such  securities,  or  portions  thereof,  substituting  therefor  others 
of  equally  good  character  and  value,  to  the  satisfaction  of  said  Treas- 
urer; and  such  securities  and  substitutes  therefor  shall  be,  at  all  times, 
exempt  from  and  not  subject  to  levy  under  writ  or  process  of  attach- 
ment; and  further,  shall  not  be  sold  under  any  process  against  such 
company  until  after  thirty  days'  notice  to  said  company,  specifying  the 
time,  place,  and  manner  of  such  sale,  and  the  process  under  which  and 
purposes  for  which  it  is  to  be  made  accompanied  by  a  copy  of  such 
process;  provided,  however,  that  whenever  any  such  company,  domestic 
or  foreign,  has  been  engaged  in  this  State  in  the  business  contemplated 
by  this  act,  has  made  deposit  in  this  State,  in  trust  or  otherwise,  of 
securities,  to  answer  any  default  of  such  company  upon  any  such  bond, 
undertaking,  recognizance,  guaranty  or  stipulation,  such  securities  so 
deposited  shall  be  by  the  trustee  or  custodian  thereof  transferred  and 
delivered  to  said  Treasurer  of  this  State  in  trust  for  the  same  purposes 
under  and  subject  to  all  the  rights  and  equities  of  all  parties  interested, 
and  to  the  terms  and  provisions  of  this  act;  and,  thereupon,  such  deposit 
shall  remain  in  trust  under  and  subject  to  the  terms  and  provisions  of 
.this  act;,  and,  whenever  such  deposit  has  been  made  with  a  trustee  by 
order  of  any  court  or  other  authority,  it  shall  be  the  duty  of  the  court 
or  other  authority,  by  order  or  otherwise,  to  direct  such  transfer  to  said 
Treasurer;  and  in  case  such  deposit  is  less  than  the  sum  of  fifty  thou- 
sand dollars,  then  said  company  must  deposit  with  said  Treasurer  securi- 
ties sufficient  to  increase  said  deposit  to  said  sum  of  fifty  thousand  dol- 
lars as  required  by  this  chapter;  provided,  domestic  corporations  char- 
tered for  the  purpose  of  doing  business  under  this  chapter  within  this 
State  alone  shall  be  required  to  deposit  securities  as  hereinbefore  pro- 
vided for  to  the  amount  of  twenty-five  thousand  dollars.  (R.  S.,  Art. 
4930,  as  amended  by  House  Bill  No.  34,  First  Called  Session,  37th  Leg.) 

Commissioner  Sliall  Issue  Certificate,  When. 

253.  That  the  Commissioner  of  Insurance  and  Banking,  upon  due 
proof  by  any  such  company  of  its  possessing  the  qualifications  in  this 
chapter  specified,  shall  issue  to  such  company  a  certificate  setting  forth 
that  such  company  has  qualified,  and  is  authorized  for  the  ensuing  year 
to  do  business  under  this  chapter,  which  said  certificate  shall  be  evidence 
of  such  qualification  of  such  company,  and  of  its  authorization  to  be- 
come and  to  be  accepted  as  sole  surety  on  all  bonds,  undertakings,  recog- 


INSURANCE  LAWS  OF  TEXAS.  97 

nizances  and  obligations  required  or  permitted  by  law  or  the  charter, 
ordinances,  rules  or  regulations  of  any  municipality,  board,  body,  organi- 
zation or  public  officer,  and  the  solvency  or  credit  of  such  company  for 
all  purposes,  and  its  sufficiency  as  such  surety.  (R.  S.,  Art.  4931.) 

May   Surrender   Certificate   of   Qualification,    But   Must   File   With   State 
Treasurer  Bond  to  Cover  Liabilities,  Before  Withdrawing  Securities. 

254.  That  any  such  company,  domestic  or  foreign,  may  at  any  time 
surrender  to  the  Commissioner  of  Insurance  and  Banking  its  said  cer- 
tificate of  qualification,  and  shall  thereupon  cease  to  engage  in  said 
business  of  suretyship;  and  such  company  shall  thereupon  be  entitled 
to  the  release  and  return  of  its  said  deposit  as  aforesaid,  in  manner 
following:  Said  company  shall  file  with  said  Commissioner  of  Insur- 
ance and  Banking  a  statement  in  writing,  under  oath,  giving  the  date, 
name  and  amount  of  all  its  then  existing  obligations  of  suretyship  in 
this  State,  briefly  stating  the  facts  of  each  case  to  said  Commissioner 
of  Insurance  and  Banking,  who,  after  examination  of  the  facts,  shall 
require  said  company  to  file  with  the  Treasurer  of  this  State  a  bond, 
payable  to  the  State,  in  a  sum  equal  to  the  whole  amount  of  its  liability 
in  this  State,  under  its  contracts,  conditioned  for  the  faithful  perform- 
ance and  fulfillment  of  all  its  outstanding  obligations,  or  it  may,  at 
its  option,  reinsure  its  risks  in  some  surety  company  authorized  to  do 
business  in  this  State,  or  cancel  all  bonds  on  which  it  is  liable,  and 
return  a  pro  rata  of  the  premium  received  thereon,  whenever  such  can- 
cellation and  return  can  be  done  without  impairing  its  obligations  to 
third  parties.  (R.  S.,  Art.  4932.) 

Note. —  ( 1 )  Securities  may  be  withdrawn  when  the  company  makes  proper 
statement  under  oath  showing  compliance  with  requirements  of  the  law.  Such 
showing  is  incomplete  unless  full  amount  of  each  outstanding  obligation  be 
given;  where  obligations  or  bonds  are  or  have  been  in  litigation,  full  and  final 
discharge  by  the  court  must  be  shown  to  obtain  release  or  liability;  certified  copy 
of  resolution  by  board  of  directors  authorizing  surrender  of  qualification  cer- 
tificate and  withdrawal  of  securities,  together  with  authenticated  showing  as 
to  number  of  directors,  number  present,  and  votes  for  and  against  the  resolu- 
tion,, should  also  be  furnished;  and  the  list  of  outstanding  obligations  should 
show  the  date,  character,  full  amount,  and  name  of  principal  signing  each. 
(Opinion  of  Attorney  General,  February  25,  1911.) 

(2)  The  bond  required   to  be  filed  before   securities  are  withdrawn   cannot 
be  made  to   cover  judgments   already  rendered   and   appealed,   but   a   sufficient 
amount  of  securities  to  pay  off  such  judgments,  should  they  become  final,  must 
be  retained  in  the  State  Treasury.     An  examination  of  the  company's   affairs 
should  be  made  to  ascertain  its  outstanding  liabilities  and  fix  amount  of  bond 
required.      (Opinion  of  Attorney  General,  November  16,  1911.) 

(3)  A   surety   company  desiring  to  withdraw   from   the   State  and   be   per- 
mitted to  withdraw  its  deposit  in  the   State  Treasury,  as   a  ground  for   such 
withdrawal  files  with  the  Commissioner  of  Insurance   and  Banking  a  reinsur- 
ance contract  by  which  its  business  is  reinsured  in  a  company  authorized  to  do 
business  in  Texas,  a  provision  in  such  reinsurance  contract  that  the  reinsuring 
company  shall  not  admit  or  deny  a  liability  on  any  bond  of  the  reinsured  com- 
pany unless  by  consent  of  the  latter,  vitiates  the  contract  to  the  extent  that 
withdrawal  of  the  securities  should  not  be  permitted,  the  reinsurance  not  being 
absolute   but   merely   tentative.      (Opinion    of   Attorney    General,    December    26, 
1912.) 

(4)  In  order  for  a  security  company  to  withdraw  securities   deposited  by 
it  with  the   State  Treasurer   it  must  first  file  with   the   Commissioner   of  In- 
surance   and    Banking    a    statement    in  .writing    under    oath,    giving    the    date, 


98  INSURANCE  LAWS  OF  TEXAS. 

name  and  amount  of  all  its  present  existing  obligations  of  suretyship,  stating 
briefly  the  facts  of  each  case.  After  examination  of  the  facts  thus  disclosed  the 
Commissioner  must  require  the  company  to  file  with  the  State  Treasurer  a 
bond  payable  to  the  State  in  a  sum  equal  to  the  whole  amount  of  its  liability 
under  its  contracts,  conditioned  for  the  faithful  performance  of  all  its  out- 
standing obligations.  Included  within  its  obligations  is  the  company's  reinsur- 
ance reserve.  In  lieu  of  the  bond,  however,  the  company  may  at  its  option  re- 
insure its  risks  in  some  surety  company  authorized  to  do  business  in  this  State, 
or  it  may  cancel  all  bonds  on  which  it  is  liable  and  return  the  pro  rata  of  the 
premiums  received  thereon,  when  such  acts  can  be  done  without  impairing  its 
obligations  to  third  parties.  The  statement  under  oath  referred  to,  taken  in 
connection  with  the  reinsurance  contract,  should  show  that  all  obligations  in 
the  company  arising  out  of  surety  bond  contracts  have  been  taken  care  of  either 
by  expiration,  cancellation  or  reinsurance.  The  reinsurance  contract  should 
clearly  show  that  it  is  made  for  the  benefit  of  those  holding  the  bond  con- 
tracts of  the  reinsured  company  and  that  the  holders  of  such  contracts  could 
recover  against  the  reinsuring  company.  The  officers  of  the  company  must  be 
authorized  by  the  directors,  and  the  directors  in  turn  by  the  shareholders  be- 
fore this  character  of  reinsurance  contract  can  be  effectuated  and  before  the 
securities  can  be  withdrawn  from  the  Treasury.  In  a  case  where  the  officers 
have  already  made  the  sworn  statement  and  executed  the  reinsurance  contract, 
these  acts  should  be  approved  by  the  shareholders  and  then  the  directors  and 
officers  should  be  authorized  to  withdraw  the  securities  from  the  State  Treas- 
ury. (Opinion  of  Attorney  General,  February  18,  1916.) 

Company  May  Withdraw  From  Bond. 

255.  Any  surety  company  may  withdraw  from  the  bond  of  any  trus- 
tee, guardian,  assignee,  receiver,  executor,  administrator  or  other  fidu- 
ciary, in  like  manner  and  by  like  proceedings  as  is  now  provided  by 
law  in  the  case  of  individual  sureties.     (E.  S.,  Art.  4933.) 

Note. — Where  a  bonding  company  is  placed  in  the  hands  of  a  receiver  it  is 
necessary  for  parties  secured  under  its  bond  contracts  to  give  new  bonds  or 
obtain  other  sureties  on  such  contracts.  (Opinion  of  Attorney  General,  October 
14,  1915.) 

May  Be  Sued  in  County  Where  Bond  Is  Filed. 

256.  If  any  suit  be  instituted  upon  any  bond  or  obligation  of  any 
surety  company,  the  proper  court  of  the  county  wherein  said  bond  is 
filed  shall  have  jurisdiction  of  said  cause,  and  service  therein  shall  be 
made,  either  upon  the  attorney  for  said  company,  by  this  act  required 
to  be  appointed,  or  upon  the  Commissioner  of  Insurance  and  Banking 
and  such  service  shall  be  to  all  intents  valid  and  effectual  as  service 
upon  said  company.    And  such  guaranty,  fidelity  and  surety  companies 
shall  be  deemed  resident  of  the  counties  wherever  they  may  do  business, 
and  the  doing  or  performing  of  any  business  in  any  county  shall  be 
deemed  an  acceptance  of  the  provisions  of  this  chapter.     (E.  S.,  Art. 
4934.) 

Note. — The  above  statute  (Sec.  256)  authorizes  service  of  process  on  the 
Commissioner  of  Insurance  and  Banking  as  the  statutory  representative  of  for- 
eign insurance  companies  and  the  revocation  of  a  company's  power  of  attorney 
appointing  said  Commissioner  its  attorney  for  service,  does  not  affect  this  stat- 
utory provision.  (Opinion  of  Attorney  General,  June  7,  1917.) 

State  Treasurer  to  Pay  Claims  When  Company  Has  Defaulted. 

257.  Defaulting  Company;  Claims  Paid,  How. — Should  any  com- 
pany of  the  character  named  or  enumerated  in  this  chapter  fail  or  re- 


INSURANCE  LAWS  OF  TEXAS.  99 

fuse  to  pay  any  loss  by  it  wheresoever  incurred  within  sixty  days  after 
its  liability  thereupon  shall  have  been  finally  determined  by  the  judg- 
ment of  any  court  of  competent  jurisdiction  wheresoever  rendered,  upon 
satisfactory  proof,  to  the  Treasurer  of  this  State,  of  such  liability  and 
of  its  non-payment,  said  Treasurer  shall,  out  of  the  deposits  so  made 
with  him,  as  by  this  chapter  provided,  pay  said  loss,  and  when  he  shall 
have  done  so,  he  shall  at  once  certify  to  the  Commissioner  of  Insurance 
and  Banking  the  fact  of  such  default  on  the  part  of  said  company; 
whereupon  said  Commissioner  shall  forthwith  cancel  and  annul  the 
certificate  of  authority  of  such  company  to  do  business  in  this  State; 
provided,  that  such  payment  shall  not  operate  to  release  the  company 
from  payment  of  any  balance  which  it  still  may  owe  after  such  pay- 
ment by  the  Treasurer  of  this  State  has  been  made.  (R.  S.,  Art.  4935, 
as  amended  by  House  Bill  No.  34,  First  Called  Session,  37th  Leg.) 

Note. —  ( 1 )  The  word  "loss"  as  used  in  above  statute  means  a  loss  under  a 
policy  or  contract  of  the  company  and  not  a  judgment  obtained  against  the 
company  as  garnishee.  (Opinion  of  Attorney  General,  December  11,  1915.) 

(2)  The  above  statute  is  not  sufficient  to  authorize  the  Treasurer  to  sell  the 
securities  on  deposit  with  him  and  obtain  money  with  which  to  pay  the  obliga- 
tions of  the  defaulting  surety  company.  In  such  case,  however,  the  holders  of 
the  obligations  of  the  company  can  apply  to  a  court  of  equity  for  a  receiver, 
which  court  may  proceed  to  carry  into  effect  the  original  purposes  of  the  trust. 
(Opinion  of  Attorney  General,  June  7,  1917.)  • 

Shall  Be  Held  to  Be  the  Agent. 

258.  Any   person   who   solicits   business  for  or   on   behalf  of   such 
corporation,  or  makes  or  transmits  for  any  person  other  than  himself, 
any  application  for  guaranty  or  security,  or  who  advertises  or  other- 
wise gives  notice  that  he  will  receive  or  transmit  same,  or  who  shall 
receive  or  transmit  same,  or  who  shall  receive  or  deliver  a  contract  of 
guaranty  or  security,  or  who  shall  examine  or  investigate  the  character 
of  any  applicant  for  guaranty  or  security  than  himself,  or  who  shall 
refer  any  applicant  for  guaranty  or  security  to  such  corporation,  whether 
any  of  said  acts  shall  be  done  at  the  instance  and  request,  or  by  the 
employment  of  such  corporation,  or  other  corporation  or  person,  or  any 
person  who  shall  issue  indemnifying  bonds  or  contracts,  whose  solvency 
and  compliance  with  his  said  bonds  or  obligations  is  guaranteed  directly 
or  indirectly  by  any  corporation,  shall  be  held  to  be  the  agent  of  such 
corporation,  so  far  as  relates  to  all  the  liabilities  and  penalties  pre- 
scribed by  this  chapter.     (E.  S.,  Art.  4936.) 

Five  Hundred  Dollar  Penalty  for  Accepting  Corporation  Which  Has  Not 
Complied  With  the  Law. 

259.  Any  person,  association  of  persons  or  corporations,  who  shall 
accept  any  corporation  created  for  the  purposes,  or  either  of  them,  mem- 
tioned  in  Article  4928  (Sec.  250)  without  such  corporation  having  pre- 
viously complied  with  the  provisions  and  requirements  of  this  chapter, 
and  having  received  from  the  Commissioner  of  Insurance  and  Banking 
the  certificate  of  authority  provided  for  in  this  chapter,  shall  forfeit 
as  a  penalty  the  sum  of  five  hundred  dollars,  to  be  recovered  by  suit  in 
the  name  of  the  State  in  any  court  of  competent  jurisdiction.     (R.  S., 
Art.  4937.) 


100  INSURANCE  LAWS  OF  TEXAS. 

When  Bond  Has  Been  Canceled,  Statement  for  Cause  Must  Be  Made  in 
Writing. 

260.  When  any   corporation   shall   cancel   a  bond   of  guaranty   or 
indemnity,  or  shall  notify  the  employer  of  the  person  whose  fidelity  is 
guaranteed,  that  said  corporation  will  no  longer  guarantee  or  be  secur- 
ity for  the  fidelity  of  said  person,  or  when  said  corporation  has  once 
guaranteed  the  fidelity  of  any  person,  or  acted  as  security  therefor,  and 
on  application  refuses  to  do  so  again,  it  shall  furnish  to  such  person  a 
full  statement  in  writing  of  the  facts  on  which  the  action  of  the  cor- 
poration is  based,  and  if  such  action  be  based  in  whole  or  in  part  on  in- 
formation, all  such  information;  and  any  such  corporation  failing  or 
refusing  to  furnish  any  such  written  statement  within  thirty  days  after 
a  request  therefor  shall  be  liable  to  such  person  injured  in  the  sum  of 
five  hundred  dollars  in  addition  to  all  other  damages  caused  thereby, 
which  may  be  sued  for  and  recovered  in  any  court  of  competent  juris- 
diction.    (E.  S.,  Art.  4938.) 

Commissioner  Shall  Revoke  Certificate  of  Authority,  When. 

261.  If  any  such  corporation  shall  fail  or  refuse  to  comply  with  the 
provisions  of  this  chapter,  the  Commissioner  of  Insurance  and  Bank- 
ing shall  revoke  the  certificate  of  authority  issued  said   corporation. 
(R.  S.,  Art.  4939.) 

Charged  With  Public  Use. 

262.  Corporations   created  for  the  purposes  mentioned  in   Article 
4928  (Sec.  250)  are  hereby  declared  to  be  charged  with  a  public  use. 
(R.  S.,  Art.  4940.) 


CHAPTER  XIII. 

GENERAL  PROVISIONS — APPLIES   TO   VARIOUS    COMPANIES. 

Must  Publish  Certificate  of  Commissioner. 

263.  It  shall  be  the  duty  of  every  insurance  company  doing  busi- 
ness in  this  State,  whether  life,  health,  fire,  marine  or  inland,  to  pub- 
lish annually,  within  thirty  days  after  the  issuance  thereof,  a  certifi- 
cate from  the  Commissioner  of  Insurance  and  Banking  that  such  com- 
pany has  in  all  respects  complied  with  the  laws  in  relation  to  insurance. 
(R.  S.,  Art.  4939.) 

Companies  Organized  in  This  State — Unlawful  Dividends. 

264.  It  shall  not  be  lawful  for  any  life,  health,  marine  or  inland 
insurance  company  organized  under  the  laws  of  this   State  to   make 
any  dividend  except  from  the  surplus  profits  arising  from  its  business; 
and  in  estimating  such  profits  there  shall  be  reserved  therefrom  a  sum 
equal  to  40  per  cent  of  the  amount  received  as  premiums  on  unex- 
pired  fire  risks  and  policies,  and  100  per  cent  of  the  premiums  received 
on  unexpired  life,  health,  marine  or  inland  transportation  risks   and 
policies;  which  amount  so  reserved  is  hereby  declared  to  be  unearned 
premiums;  and  there  shall  also  be  reserved  the  amount  of  all  unpaid 
losses,  whether  adjusted  or  unadjusted;  all  sums  due  the  company  on 


INSURANCE  LAWS  OF  TEXAS.  101 

bonds,  mortgages,  stock  and  book  accounts,  of  which  no  part  of  the 
principal  or  interest  thereon  has  been  paid  during  the  year  preceding 
such  estimate  of  profit,  and  upon  which  suit  for  foreclosures  or  collec- 
tions has  not  been  commenced,  or  which,  after  judgment  has  been  ob- 
tained thereon,  shall  have  remained  more  than  two  years  unsatisfied, 
and  upon  which  interest  shall  not  have  been  paid;  and  in  case  of  any 
such  judgment,  the  interest  due  or  accrued  thereon  and  remaining  un- 
paid shall  also  be  reserved.  (R.  S.,  Arts.  4867  and  4944.) 

Penalty  for  Making  Unlawful  Dividends. 

265.  Any  dividend  made  contrary  to  the  provisions  of  the  preced- 
ing article  shall  subject  the  company  making  it  to  a  forfeiture  of  its 
charter,  and  the  Commissioner  of  Insurance  and  Banking  shall  forth- 
with revoke  its  certificate  of  authority.     (R.  S.,  Art.  4868.) 

Association  of  Companies  Not  Permitted  to  Do  Business  Until. 

266.  In  the  event  that  any  number  of  insurance  companies,  whether 
life,  health,  fire,  marine  or  inland,  should  associate  themselves  together 
for  the  purpose  of  issuing  or  vending  policies  or  joint  policies  of  insur- 
ance, such  association  shall  not  be  permitted  to  do  business  in  this 
State  until  the  taxes  and  fees  due  from  each  of  said  companies  shall 
have  been  paid  and  all  the  conditions  of  the  law  fully  complied  with 
by  each  company;  and  any  company  failing  or  refusing  to  pay  such 
taxes  and  fees,  and  to  fully  comply  with  the  requirements  of  law,  shall 
be  refused  permission  by  the  Commissioner  of  Insurance  and  Banking 
to  do  business  in  this  State.     (R.  S.,  Art.  4945.) 

Non-Competing  Insurance  Companies  May  Consolidate. 

267.  Any  two  or  more  insurance  companies  doing  a  similar  line  of 
business  which  are  and  have  been  substantially  owned  by  same  con- 
trolling stockholders  and  which  have  never  been   actually  competing 
companies  with  each  other,  and  where  all  of  them  have  been  previously 
organized  under  the  laws  of  this  State,  may  unite  or  consolidate  upon 
a  compliance  with  the  terms  of  this  act;  provided,  that  such  consolida- 
tion shall  not  be  effectuated  in  violation  of  the  Anti-Trust  and  Anti- 
Monopoly  Laws  of  this  State.     (Acts  36th  Leg.,  Chap.  57,  Sec.  1.) 

Before  Consolidating  Stockholders'  Meetings  Must  Be  Called. 

268.  Before  any  such  consolidation  shall  take  place  the  parties  hold- 
ing at  least  two-thirds  of  the  capital  stock  of  each  of  the  companies 
shall  vote  in  favor  thereof  at  a  separate  meeting  of  the  stockholders  of 
each  company  called  for  such  purpose.     Such  meeting  may  be  called 
in  the  manner  provided  in  the  by-laws  of  the  respective  companies  or 
the  laws  under  which  such  companies  are  organized,  for  calling  special 
meetings  of  stockholders,  except  that  each  stockholder  shall  be  notified 
by  mail  of  the  time  and  place  and  object  of  such  meeting.     (Acts  36th 
Leg.,  Chap.  57,  Sec.  2.) 

May  Unite  Assets  Under  New  Name  or  Name  of  One  of  the  Consolidating 
Companies — Proportionate  Value  of  Stock  in  Consolidated  Companies. 

269.  Such  companies  proposing  to  consolidate  may  unite  their  assets 
or  any  part  thereof  and  become  incorporated  in  one  body  under  the  name 


102  INSURANCE  LAWS  OF  TEXAS. 

of  any  one  or  more  of  such  companies  or  under  any  other  name  that 
may  be  agreed  upon,  and  issue  stock  in  such  corporation  to  the  stock- 
holders of  each  of  the  companies  consolidated,  the  actual  value  of  which 
stock  in  the  new  company  shall  bear  the  same  proportion  to  the  actual 
value  of  the  stock  surrendered  by  such  stockholder  as  the  entire  assets 
of  the  company  surrendering  such  stock  bears  to  the  entire  assets  of  the 
new  company  which  value  shall  be  agreed  upon  by  the  Board  of  Direc- 
tors of  each  company;  provided,  that  said  stockholders  (holding  two- 
thirds  of  the  stock)  may  at  the  meeting  provided  for  in  Section  2  of 
this  act,  delegate  the  valuation  of  assets  to  a  committee  of  stockholders 
appointed  by  their  respective  Boards  of  Directors.  (Acts  36th  Leg., 
Chap.  57,  Sec.  3.) 

One    Company   May   Take   Over   Assets   of   the    Others    and   Increase    Its 
Capital  Stock. 

270.  Instead  of  the  method  provided  in  Section  3  of  this  act,  one 
company  may  take  over  all  the  assets  of  the  other  companies  proposing 
to  consolidate  and  issue  stock  to  their  stockholders  in  proportion  that 
the  value  of  their  stock  bears  to  the  entire  value  of  the  assets  of  the 
company  in  which  they  are  stockholders,  and  for  this  purpose  the  cap- 
ital stock  of  such  purchasing  company  may  be  increased,  as  now  or 
may  be  hereafter  provided  by  law.     (Acts  36th  Leg.,  Chap.  57,  Sec.  4.) 

Commissioner,   When  the   Companies   Have   Been   Consolidated,    to   Issue 
Charter. 

271.  In  case  of  consolidation  under  Section  3  of  this  act  the  Insur- 
ance Commissioner  shall  upon  proof  furnished  of  a  compliance  with  the 
terms  hereof  and  being  satisfied  that  the  proposed  consolidation  is  for 
the  best  interests  of  the  policyholders  of  the  respective  companies  and 
made  in  accordance  with  law,  and  upon  the  filing  of  articles  of  incor- 
poration and  other  due  proceedings  had  as  required  by  the  laws  of  this 
State,  issue  and  deliver  a  charter  to  such  new  company.      (Acts  36th 
Leg.,  Chap.  57,  Sec.  5.) 

Consolidation  Shall   Work   Dissolution   of  Absorbed   Companies,   Without 
Prejudice,  Ho"wever,  to  Bights  of  Interested  Parties. 

272.  Such  consolidation  shall  work  a  dissolution  of  the  companies 
absorbed  who  shall  in  nowise  prejudice  the  right  of  any  creditors  of 
any  such  corporation  to  have  payment  of  his  debt  out  of  the  assets  and 
property  thereof,  nor  shall  any  creditor  be  thereby  ^deprived  of,   nor 
prejudiced  in  any  right  of  action  then  pending  or  existing  or  which  may 
thereafter  arise  against  said  company,  and  service  or  summons  of  the 
proper  officers  or  agents  of  such  new  or  reorganized  corporation  shall 
be  deemed  sufficient  as  to  all  or  any  of  such  companies.      (Acts  36th 
Leg.,  Chap.  57,  Sec.  6.) 

All   Outstanding-  Policies  of   the   Consolidating   Companies   Shall   Be   As- 
sumed by  the  Reorganized  Company. 

273.  All  policies   of  insurance  outstanding   against   all   such   com- 
panies shall  by  reason  of  such  consolidation  be  assumed  by  the  reor- 
ganized company,  and  they  shall  carry  out  the  terms  of  such  policy  on 
the  part  of  the  insurer  and  be  entitled  to  all  the  rights  and  privileges 


INSURANCE  LAWS  OF  TEXAS.  103 

thereof  and  the  reserves  accumulating  on  such  policy  prior  to  such  con- 
solidation.    (Acts  36th  Leg.,  Chap.  57,  Sec.  7.) 

Notices  Shall  Be  Published  Three  Successive  Weeks  in  Two  Papers. 

274.  Whenever  by  any  provision  of  this  title  any  notice  or  other 
matter  is  required  to  be  published,  it  shall,  unless  otherwise  provided, 
be  published  for  three  successive  weeks  in  two  newspapers  printed  in 
the  State  and  which  have  a  general  circulation  in  the  State.     (R.  S., 
Art.  4946.) 

Annual  Tax,  and  Denning  Gross  Premiums. 

275.  Every    insurance    company   transacting   the   business   of    fire, 
marine,  marine  inland,  accident,  credit,  title,  live  stock,  fidelity,  guar- 
anty, surety,  casualty  or  any  other  kind  or  character  of  insurance  busi- 
ness other  than  the  business  of  life  insurance,  within  this  State,  and 
other  than  Fraternal  Benefit  Associations,  at  the  time  of  filing  its  an- 
nual  statement,   shall   report  to   the   Commissioner  of   Insurance   and 
Banking  the  gross  amount  of  premiums  received  in  the   State   upon 
property,  and  from  persons  residing  in  this  State  during  the  preceding 
year,  and  each  of  such  companies  shall  pay  an  annual  tax  upon  such 
gross  premium  receipts  as  follows:     Shall  pay  a  tax  of  two  and  six- 
tenths  per  cent;  provided,  that  any  company  doing  two  or  more  kinds 
of  insurance  business  herein  referred  to,  shall  pay  the  tax  herein  levied 
upon  its  gross  premiums  received  from  each  of  said  kinds  of  business; 
and  the  gross  premium  receipts  where  referred  to  in  this  act  are  under- 
stood to  be  the  premium  receipts  reported  to  the  Commissioner  of  In- 
surance and  Banking  by  the  insurance  companies  upon  the  sworn  state- 
ment of  two  principal  officers  of  such  company,  less  return  premiums 
paid  policyholders,  and  to  the  premiums  paid  for  reinsurance  in  com- 
panies authorized  to  do  business  in  this  State.     (Acts  32d  Leg.,  Chap. 
108,  Sec.  1.) 

Note. — Casualty  companies,  home  companies  organized  in  Texas,  are  not  ex- 
empt from  payment  of  the  taxes  on  their  gross  premium  receipts.  (Opinion 
of  Attorney  General,  January  18,  1915.) 

Manner  of  Collecting  Taxes. 

276.  Upon  receipts  by  him  of  sworn  statements,  showing  the  gross 
premium  receipts  by  such  companies,  the   Commissioner  shall  certify 
to  the  State  Treasurer  the  amount  of  taxes  due   (by)   each  company, 
which  tax  shall  be  paid  to  the  State  Treasurer  for  the  use  of  the  State 
on  or  before  the  first  of  March  following,  and  the  receipt  of  the  Treas- 
urer shall  be  evidence  of  the  payment  of  such  taxes.     No  such  insur- 
ance company  shall  receive  a  permit  to  do  business  in  this  State  until 
such  taxes  are  paid.     (Acts  32d  Leg.,  Chap.  108,  Sec.  1.) 

Note. — Where  an  insurance  company,  through  an  error,  reports  to  the  Com- 
missioner of  Insurance  and  Banking  gross  amount  of  premiums  and  pays  to  the 
Treasurer  taxes  due  thereon,  which  gross  receipts,  and  consequently  the  taxes 
paid  thereon,  were  in  excess  of  the  actual  amount  of  gross  receipts  upon  which 
taxes  were  due,  the  Commissioner  would  have  no  authority  to  permit  the 
deduction  of  such  excess  amount  from  the  subsequent  year's  report  and  permit 
the  payment  of  a  gross  receipt  tax  for  such  subsequent  year  less  the  exces- 


104  INSURANCE  LAWS  OF  TEXAS. 

sive  amount  paid  for  the  previous  year.      (Opinion  of  Attorney  General,  June 
17,  1919.) 

Certain  Investments  Will  Reduce  Taxes — Municipal  and  County  Occupa- 
tion Taxes  Prohibited — Fraternal  Beneficiary  Associations  Exempt. 

277.  If  any  such,  insurance  company  shall  have  as  much  as  one- 
fourth  of  its  entire  assets,  as  shown  by  said  sworn  statement,  invested 
in  any  or  all  of  the  following  securities:     Eeal  estate  in  the  State  of 
Texas,  bonds  of  this  State  or  of  any  county,  incorporated  city  or  town 
of  this  State,  or  other  property  in  this  State  in  which  by  law  such 
companies  may  invest  their  funds,  then  the  annual  tax  of  any  such 
companies  shall  be  one  per  cent  of  its  said  gross  premium  receipts, 
and  if  any  such  company  shall  invest  as  aforesaid  as  much  as  one- 
half  of  its  assets,  then  the  annual  tax  of  such  company  shall  be  one- 
half  of  one  per  cent  of  its  gross  premium  receipts,  as  above  denned; 
and  provided  further,  that  no  occupation  tax  shall  be  'levied  on  in- 
surance companies  herein   subjected  to  a  gross  premium  receipt  tax 
by  any  county,  city  or  town;  provided,  also,  that  all  mutual  fraternal 
benevolent  associations,  now  or  hereafter  doing  business  in  this  State 
under  the  lodge  system  and  on  the  assessment  plan,  whether  organized 
under  the  laws  of  this  State  or  a  foreign  state  or  country,  are  exempt 
from  the  provisions  of  this  section.     (Acts  32d  Leg.,  Chap.  108,  Sec.  1.) 

No  Other  Taxes  Can  Be  Levied  or  Collected,  But  Fire  Insurance  Companies 
Must  Pay  Expenses  of  State  Insurance  Board — Purely  Co-operative  or 
Mutual  Fire  Insurance  Companies  Are  Exempt  From  Provisions  of 
This  Act. 

278.  The  taxes  aforesaid  shall  constitute  all  taxes  and  license  fees 
collectible  under  the  laws   of  this  State  against  any   such   insurance 
companies,  and  no  other  occupation  or  other  taxes  shall  be  levied  on  or 
collected  from  any  insurance  company  by  any  county,  city  or  town, 
but  this  act  shall  not  be  construed  to  prohibit  the  levy  and  collection 
of  State,  county  and  municipal  taxes  upon  the  real  and  personal  prop- 
erty of  such  companies ;  provided,  that  purely  co-operative  or  mutual  fire 
insurance  companies  carried  on  by  the  members  thereof  solely  for  the 
protection  of  their  own  property,  and  not  for  profits,  shall  be  exempt 
from  the  provisions  of  this  bill;  provided,  that  in  addition  to  the  tax 
above  prescribed,  each  company  doing  the  business  herein  referred  to 
and  affected  by  the  provisions  of  the  act  of  the  Fourth  Called  Session 
of  the  Thirty-first  Legislature,  approved  September  6,  1910,  and  pub- 
lished as  Chapter  8,  General  Laws  of  said  session,  shall  pay  its  pro  rata 
share  of  the  charge  or  cost  of  maintaining  the  State  Insurance  Board  as 
provided  by  Section  28  of  said  act,  approved  September  6,  1910,  and 
published  as  Chapter  8  of  the  General  Laws  of  the  Fourth  Called  Ses- 
sion of  the  Thirty-first  Legislature;  and  provided  further,  that  portion 
of  Section  28  of  the  State  Insurance  Board  Law  which  reads  as  fol- 
lows:    "Provided,  that  the  collections  from  insurance  companies  pro- 
vided for  in  this  section  shall  not  be  made  for  any  year  during  which 
any  such  company  shall  be  liable  under  the  laws  of  this  State  to  the 
payment  of  an  occupation  tax  at  a  rate  of  two  and  one-half  per  cent  or 
more  of  the  gross  premiums  received,  less  deductions  for  reinsurance 


INSURANCE  LAWS  OF  TEXAS.  105 

and  return  premiums  on  canceled  policies,"  be  and  the  same  is  hereby 
repealed.     (Acts  32d  Leg.,  Chap.  108,  Sec.  1.) 

Note. —  (1)  A  surety  company,  making  bonds  required  by  the  United  States 
government  under  a  license  granted  under  an  Act  of  Congress,  does  not  thereby 
become  a  Federal  agency,  and  the  premiums  collected  on  such  bonds  are  not 
exempt  from  taxation.  (Opinion  of  Attorney  General,  March  1,  1910.) 

(2)  A  company,  licensed  to  do  a  life  insurance  business  and  an  accident 
insurance  business,  and  which  withdraws  from  the  State  as  to  its  life  business, 
is  not  required  to  pay  taxes  on  premiums  on  renewals  on  its  life  business  in 
order  to  obtain  a  license  to  continue  its  accident  business.  (Opinion  of  Attor- 
ney General,  September  29,  1910.) 

Repealing  Clause. 

279.  All  laws  and  parts  of  laws  in  conflict  herewith  are  hereby  re- 
pealed.    (Acts  32d  Leg.,  Chap.  108,  Sec.  2.) 

Misrepresentation  Must  Be  Material  to  Avoid  Contract  on  That  Ground. 

280.  Any  provision  in  any  contract  or  policy  of  insurance  issued 
or  contracted  for  in  this  State,  which  provides  that  the  answers  or 
statements  made  in  the  application  of  such  contract,  or  in  the  con- 
tract of  insurance,  if  untrue  or  false,  shall  render  the  contract  or  policy 
void  or  voidable,  shall  be  of  no  effect  and  shall  not  constitute  any 
defense  to  any  suit  brought  upon  such  contract,  unless  it  be  shown 
upon  the  trial  thereof  that  the  matter  or  thing  misrepresented  was 
material  to  the  risk  or  actually  contributed  to  the  contingency  or  event 
on  which  said  policy  became  due  and  payable,  and  whether  it  was  ma- 
terial or  so  contributed  in  any  case,  shall  be  a  question  of  fact  to  be 
determined  by  the  court  or  jury  trying  such  case.     (E.  S.,  Art.  4947.) 

No  Defense  Based  Upon  Misrepresentation  Valid  Unless  Defendant  Shall 
Within  Reasonable  Time  After  Discovering  the  Falsity  Give  Notice. 

281.  That  in  all  suits  brought  upon  insurance  contracts  or  policies 
hereafter  issued  or  contracted  for  in  this  State,  no  defense  based  upon 
misrepresentations  made  in  the  application  for  or  in  obtaining  or  secur- 
ing the  said  contract  shall  be  valid,  unless  the  defendant  shall  show 
on  the  trial  that  within  a  reasonable  time  after  discovering  the  falsity 
of  the  misrepresentations  so  made  it  gave  notice  to  the  assured,  if  liv- 
ing, or,  if  dead,  to  the  owners  or  beneficiaries  of  said  contract,  that  it 
refused  to  be  bound  by  the  contract  or  policy;  provided,  that  ninety 
days  shall  be  a  reasonable  time ;  provided  also,  that  this  article  shall  not 
be  construed  as  to  render  available  as  a  defense  any  immaterial  misrep- 
resentation, nor  to  in  anywise  modify  or  affect  Article  3096aa  (4947). 
(R.  S.,  Art.  4948.) 

Shall  Not  Constitute  Defense  Unless  Shown  That  False  Statement  Made 
Was  Fraudulently  Made  and  Material. 

282.  That  any  provision  in  any  contract  or  policy  of  insurance  is- 
sued or  contracted  for  in  this   State,  which  provides  that  the  same 
shall  be  void,  or  voidable,  if  any  misrepresentations  or  false  statements 
be  made  in  proofs  of  loss  or  of  death,  as  the  case  may  be,  shall  be  of 
no  effect,  and  shall  not  constitute  any  defense  to  any  suit  brought  upon 
such  contract  or  policy,  unless  it  be  shown  upon  the  trial  of  such  suit 
that  the  false  statement  made  in  such  proofs  of  loss  or  death  was  fraud- 


106  INSURANCE  LAWS  or  TEXAS. 

ulently  made,  and  misrepresented  a  fact  material  to  the  question  of  the 
liability  of  the  insurance  company  upon  the  contract  of  insurance  sued 
on,  and  that  the  insurance  company  was  thereby  misled,  and  caused  to 
waive  or  lose  some  valid  defense  to  the  policy.  (E.  S.,  Art.  4949.) 

The    Insurance   Contract   Governed   by   Laws   of    Texas    Notwithstanding 
Stipulations  to  the  Contrary. 

283.  That  any  contract  of  insurance  payable  to  any  citizen  or  in- 
habitant of  this  State  by  any  insurance  company  or  corporation  doing 
business  within  this  State  shall  be  held  to  be  a  contract  made  and  en- 
tered into  under  and  by  virtue  of  the  laws  of  this  State  relating  to 
insurance  and  governed  thereby,  notwithstanding  such  policy  or  con- 
tract of  insurance  may  provide  that  the  contract  was  executed  and  the 
premiums  and  policy   (in  case  it  becomes  a  demand)   shall  be  payable 
without  this  State,  or  at  the  home  office  of  the  company  or  corporation 

issuing  the  same.     (E.  S.,  Art.  4950.) 

* 

No  Agreement  Shortening  Period  of  Limitation  Valid. 

284.  It  shall  be  unlawful  for  any  person,  firm,  corporation,  associa- 
tion, or  combination  of  whatsoever  kind  to  enter  into  any  stipulation, 
contract  or  agreement,  by  reason  whereof  the  time  in  which  to   sue 
thereon  is  limited  to  a  shorter  period  than  two  years.     And  no  stipula- 
tion, contract  or  agreement  for  any  such  shorter  limitation  in  which  to 
sue  shall  ever  be  valid  in 'this  State.    (E.  S.,  Art.  5713.) 

Notice  of  Claims  for  Damages;  Rule  as  to. 

285.  No  stipulation  in  any  contract  requiring  notice  to  be  given  of 
any  claim  for  damages  as  a  condition  precedent  to  the  right  to  sue 
thereon  shall  ever  be  valid,  unless  such  stipulation  is  reasonable ;  and 
any  such  stipulation  fixing  the  time  within  which  such  notice  shall  be 
given  at  a  less  period  than  ninety  days  shall  be  void,  and,  when  any 
such  notice  is  required,  the  same  may  be  given  to  the  nearest  or  to  any 
other  convenient  local  agent  of  the  company  requiring  the  same;  pro- 
vided, that  no  stipulation  in  any  contract  between  a  person,  corporation 
or  receiver  operating  railroad,  or  street  railway,  or  interurban  railroad, 
and  an  employe  or  servant  requiring  notice  of  a  claim  by  an  employe  or 
servant  for  damages  for  injury  received  to  the  person,  or  by  a  husband, 
wife,  father,  mother,  child  or  children  of  a  deceased  employe  for  his  or 
her  death,  caused  by  negligence  as  a  condition  precedent  to  liability, 
shall  ever  be  valid.     In  any  suit  brought  under  this  and  the  preceding 
article  it  shall  be  presumed  that  notice  has  been  given,  unless  the  want 
of  notice  is  especially  pleaded  under  oath.     (E.  S.,  Art.  5714.) 

Note. — An  accident  and  health  insurance  policy  containing  the  provision  that: 
"Written  notice  of  injury  or  sickness  on  which  claim  may  be  based,  shall  be 
given  to  the  association  within  twenty  days  after  the  date  of  the  accident  caus- 
ing such  injury  or  within  ten  days  after  the  commencement  of  disability  from 
such  sickness,"  should  not  be  approved  by  the  Commissioner  of  Insurance  and 
Banking,  because  said  provision  in  the  policy  is  in  conflict  with  the  provisions 
of  Article  5714  of  the  Revised  Statutes  of  Texas,  which  requires  that  no  stipu- 
lation in  a  contract  fixing  the  time  within  which  notice  of  any  claim  for  dam- 
ages shall  be  given,  as  a  condition  precedent  to  t the  right  to  sue  thereon,  at  a 
less  period  than  ninety  days,  shall  be  valid.  (Opinion  of  Attorney  General. 
July  22,  1921.) 


INSURANCE  LAWS  OF  TEXAS.  107 

Photographic  Copy  of  Contracts — Act  Does  Not  Apply  in  Which  There  Is 
a  Clause  in  Policy  Making  It  Indisputable  After  Two  Years  or  Less, 
Provided,  Etc. 

286.  Every  contract  or  policy  of  insurance  issued  or  contracted  for 
in  this  State  shall  be  accompanied  by  a  written,  photographic  or  printed 
copy  of  the  application  for  such  insurance  policy  or  contract,  as  well 
as  a  copy  of  all  questions  asked  and  answers  given  thereto.     The  pro- 
visions of  the  foregoing  articles  shall  not  apply  to  policies  of  life  in- 
surance in  which  there  is  a  clause  making  such  policy  indisputable 
after  two  years  or  less,  provided  premiums  are  duly  paid ;  provided  fur- 
ther, that  no  defense  based  upon  misrepresentation  made  in  the  ap- 
plication for  or  in  obtaining  or  securing  any  contract  of  insurance  upon 
the  life  of  any  person  being  or  residing  in  this  State  shall  be  valid 
or  enforcible  in  any  suit  brought  upon  such  contract  two  years  or  more 
after  the  date  of  its  issuance  when  premiums  due  on  such  contract 
for  the  said  term  of  two  years  have  been  paid  to  and  received  by  the 
company  issuing  such  contract  without  notice  to  the  assured  by  the 
company  so  issuing  such  contract  of  its  intention  to  rescind  the  same 
on  account  of  misrepresentations  so  made,  unless  it  shall  be  shown  on 
the  trial  that  such  misrepresentation  was  material  to  the  risk  and  in- 
tentionally made.     (E.  S.,  Art.  4951.) 

Level  Premium  Policy  Shall  Not  Be  Issued  Providing  for  More  Than 
One  Year  Preliminary  Term. 

287.  No  level  premium  policy  of  life  insurance  shall  be  issued  or 
sold  by  any  company  in  this  State  after  December  31,  1909,  which  pro- 
vides for  more  than  one  year  preliminary   term   insurance.     (E.    S., 
Art.  4952.) 

Policies  Shall  Contain  Entire  Contract. 

288.  Every  policy  of  insurance  issued  or  delivered  within  this  State 
on  or  after  the  first  day  of  January,  1910,  by  any  life  insurance  com- 
pany doing  business  within  this  State,  shall  contain  the  entire  con- 
tract between  the  parties,  and  the  application  therefor  may  be  made 
a  part  thereof.     (E.  S.,  Art.  4953.) 

Note. — This  section  repeals  Section  286  of  this  Digest.      (Department  ruling.) 

Companies  Shall  Not  Permit  Distinctions. 

289.  No  insurance  company  doing  business  in  this  State  shall  make 
or  permit  any  distinction  or  discrimination  in  favor  of  individuals  be- 
tween insurants  (the  insured)  of  the  same  class  and  of  equal  expecta- 
tion of  life  in  the  amount  of  or  payment  of  premiums  or  rates  charged 
for  policies  of  life  endowment  insurance  or  in  the  dividends  or  other 
benefits  payable  thereon;  nor  shall  any  such  company  or  agent  thereof 
make  any  contract  of  insurance  or  agreement  as  to  such  contract  other 
than   as  expressed   in   the   policy  .issued   thereon,   nor   shall   any   such 
company  or  any  officer,  agent,  solicitor  or  representative  thereof  pay, 
allow  or  give,  or  offer  to  pay,  allow  or  give,  directly  or  indirectly,  as  an 
inducement  to  insurance  any  rebate  of  premium  payable  on  the  policy, 
or  any  special  favor  or  advantage  in  the  dividends  or  other  benefits 
to  accrue  thereon  or  any  paid  employment  or  contract  for  service  of 


108  INSURANCE  LAWS  or  TEXAS. 

any  kind,  or  any  valuable  consideration  or  inducement  whatever  not 
specified  in  the  policy  contract  of  insurance;  or  give,  sell  or  purchase, 
or  offer  to  give,  sell  or  purchase,  as  an  inducement  to  insurance,  or  in 
connection  therewith,  any  stocks,  bonds  or  other  securities  of  any  in- 
surance company  or  other  corporation,  association  or  partnership  or 
any  dividends  or  profits  to  accrue  thereon  or  anything  of  value  what- 
soever not  specified  in  the  policy,  or  issue  any  policy  containing  any 
special  or  board  contract  or  similar  provision,  by  the  terms  of  which 
said  policy  will  share  or  participate  in  any  special  fund  derived  from 
a  tax  or  a  charge  against  any  portion  of  the  premium  on  any  other 
policy.  Any  company  or  agent  violating  the  provisions  of  this  article 
shall  be  deemed  guilty  of  a  misdemeanor,  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  not  less  than  one  hundred  dollars,  nor  more 
than  five  hundred  dollars,  and  the  said  company  shall  as  an  additional 
penalty  forfeit  its  certificate  of  authority  to  do  business  in  this  State, 
and  the  said  agent  shall  as  an  additional  penalty  forfeit  his  license  to 
do  business  in  this  State  for  one  year;  provided,  the  company  shall  not 
be  held  liable  under  this  article  for  any  act  of  its  agent  unless  such 
act  was  authorized  by  its  president,  one  of  its  vice-presidents,  its  secre- 
tary or  assistant  secretary,  or  by  its  board  of  directors.  (P.  C.,  643, 
and  E.  S.,  Art.  4954.) 

Note. —  ( 1 )  Policies  of  accident  insurance,  which  promise  to  pay  to  the  holder, 
if  he  renews  the  policy  for  a  second  year,  a  benefit  greater  by  10  per  cent  than 
the  benefit  given  the  first  year,  and  if  renewed  the  third  year,  a  benefit  of  20 
per  cent  greater,  and  so  on,  increasing  the  benefit  10  per  cent  on  each  annual 
renewal  for  five  years,  at.  the  same  annual  premium  rate,  should  not  be  per- 
mitted to  issue  in  this  State  because  forbidden  by  the  law  prohibiting  rebates 
and  discrimination.  Contracts  already  in  existence,  however,  under  which  such 
accumulations  have  accrued  or  will  accrue  may  be  carried  out  according  to 
their  terms;  but  no  new  contract  promising  such  accumulations  can  be  law- 
fully made.  (Opinions  of  Attorney  General,  July  21  and  September  21,  1911.) 

(2)  Accumulations  on  accident  policies  mentioned  in  opinions   of  Attorney 
General  above  noted  are  forbidden  and  prohibited  on  and  after  October  1,  1911. 
(Department  ruling.) 

(3)  It  is  no  violation  of  the  law  for  a  company  to  collect  a  policy  fee  in 
excess  of  the  usual  premium  when  for  the  first  time  it  issues  a  policy  on  the 
industrial  or  weekly  or  monthly  premium  plan.      (Opinion  of  Attorney  General, 
November  21,  1911.) 

(4)  Survivorship    fund   contracts   are   prohibited   by   the   provision   of    this 
act.     (Opinion  of  Attorney  General,  May  23,  1913.) 

(5)  Survivorship   fund  contracts  and   all  similar   contracts  written  by  life 
insurance  companies  are  illegal  and  should  be  forbidden.     Such  contracts,  how- 
ever, as  have  already  .been  issued  are  valid  and  binding.      (Opinion  of  Attorney 
General,  July  10,  1913.) 

(6)  Acceptance  of  note  without   interest  in  payment  of  premiums    is   dis- 
crimination and  a  rebate.     When  a  note  is  taken  by  a  company  or  any  of  its 
agents,  the  interest  rate  on  every  such  note  must  'be  the  same.      (Department 
ruling,  December  9,   1913.     Opinion  of  Attorney  General,  December  20,    1913.) 

Shall  Apply  to  All  Companies. 

290.  All  the  provisions  of  the  laws  of  this  State  applicable  to  the 
life,  fire,  marine,  inland,  lightning  or  tornado  insurance  companies 
shall,  so  far  as  the  same  are  applicable,  govern  and  apply  to ,  all  com- 
panies transacting  any  other  kind  of  insurance  business  in  this  State 


INSURANCE  LAWS  OF  TEXAS.  109 

so  far  as  they  are  not  in  conflict  with  the  provisions  of  law  made  specially 
applicable  thereto.     (R.  S.,  Art.  4955.) 

Note. — Article  4955,  R.  S.,  has  been  held  by  the  courts  of  this  State  not  ap- 
plicable to  surety  companies.     (Opinion  of  Attorney  General,  January  7,  1918.) 

Corporations  May  Be   Incorporated   to   Transact   One   or  More   Kinds   of 
Insurance  Business. 

291.  Corporations  may  be  incorporated  under  the  laws  of  this  State 
to  transact  any  one  or  more  kinds  of  insurance  business  other  than 
life,  fire,  marine,  inland,  lightning  or  tornado  insurance  business  in 
the  same  manner  and  by  complying  with  the  same  requirements  as  pre- 
scribed by  law  for  the  incorporation  of  life  insurance  companies;  pro- 
vided, that  no  such  company  shall  be  incorporated  having  the  power 
to  do  a  fidelity  and  surety  business  or  a  liability  insurance  business 
with  a  paid-up  capital  stock  of  less  than  $200,000.00.     (R.   S.,  Art. 
4956.) 

Shall  Not  Apply  to  Fraternal  Beneficiary  Associations. 

292.  None  of  the  terms  or  provisions  of  this  chapter  shall  apply  to 
nor  in  anywise  affect  fraternal  beneficiary  associations  as  defined  by 
the  laws  of  this  State,  nor  apply  to  companies  carrying  on  the  business 
of  life  or  casualty  insurance,  on  the  assessment  or  annual  premium 
plan,  under  the  provisions  of  this  title.     (R.  S.,  Art.  4957.) 

Shall  Not  Misrepresent  Policies. 

293.  No  life  insurance  company  doing  business  in  this  State,  and 
no  officer,  director  or  agent  thereof  shall  issue  or  circulate  or  cause  or 
permit  to  be  issued  or  circulated,  any  estimate,  illustration,  circular  or 
statement  of  any  sort  misrepresenting  the  terms  of  any  policy  issued 
by  it  or  benefits  or  advantages  to  be  promised  thereby  or  the  dividends 
or  share  of  surplus  to  be  received  thereon.     (R.  S.,  Art.  4958.) 

Policy  Shall  Not  Be  Defeated. 

294.  No  recovery  upon  any  life,  accident  or  health  insurance  policy 
shall  ever  be  defeated  because  of  any  misrepresentation  in  the  applica- 
tion which  is  of  an  immaterial  fact  and  which  does  not  affect  the  risks 
assumed.     (R.  S.,  Art.  4959.) 

As   Conditions   Precedent,    Foreign   Corporation   Shall   Be   Held   to   Have 
Assented  to  These  Provisions. 

295.  The  provisions  of  this  title  are  conditions  upon  which  foreign 
insurance  companies  shall  be  permitted  to  do  business  within  this  State, 
and  any  such  foreign  corporations  engaged  in  issuing  insurance  con- 
tracts or  policies  within  this  State  shall  be  held  to  have  assented  thereto 
as  a  condition  precedent  to  its  rights  to  engage  in  such  business  within 
this  State.     (R.  S.,  Art.  4972.) 


110  INSURANCE  LAWS  OF  TEXAS. 

CHAPTER  XIV. 

WORKMEN'S  COMPENSATION  AND  EMPLOYERS'  LIABILITY. 

Chapter   179,   Acts  Thirty- third  Legislature,   Repealed   and   Amended. 

296.  That   Chapter   179,   entitled   "An   Act   relating   to   employers' 
liability  and  providing  for  the  compensation  of  certain  employes,  and 
their  representatives   and  beneficiaries-  for  personal   injuries   sustained 
in  the  course  of  employment,  and  for  deaths  resulting  from  such  in- 
juries, and  to  provide  and  determine  in  what  cases  compensation  shall 
be  paid,  and  to  make  the  payment  thereof  the  more  certain  and  prompt 
by  the  creation  of  an  insurance  association  to  insure  and  guarantee  such 
payments  and  of  an  industrial  accident  board  for  the  investigation  of 
claims  and  for  the  adjudication  thereof  for  consenting  parties,  fixing 
the  membership  and  powers  of  said  board  and  its  compensation  and 
duties,  and  the  method  of  its  appointment,  and  the  term  of  office  of  its 
members,  and  fixing  also  the  powers,  duties  and  liabilities  of  said  in- 
surance association  and  the  extent  of  control  over  the  same  to  be  exer- 
cised by  the  Commissioner  of  Banking  and  Insurance  and  providing 
also  for  the  insurance   of  payments  of  compensation  to  employes  by 
certain  other  insurance  companies  and  organizations,  and  declaring  an 
emergency/'  be  and  the  same  is  hereby  amended  so  as  to  hereafter  read 
as  follows  (Acts  35th  Leg.,  Chap.  103,  Sec.  1)  : 

PART  I. 

MODIFICATION    OF   REMEDIES. 

What  Shall  Not  Be  a  Defense. 

297.  In  an  action  to  recover  damages  for  personal  injuries  sustained 
by  an  employe  in  the  course  of  his  employment,  or  for  death  resulting 
from  personal  injury  so  sustained,  it  shall  not  be  a  defense : 

1.  That  the  employe  was  guilty  of  contributory  negligence. 

2.  That  the  injury  was  caused  by  the  negligence  of  a  fellow  employe. 

3.  That  the  employe  had  assumed  the  risk  of  the  injury  incident 
to  his  employment;  but  such  employer  may  defend  in  such  action  on 
the  ground  that  the  injury  was  caused  by  the  wilful  intention  of  the 
employe  to  bring  about  the  injury,  or  was  so  caused  while  the  employe 
was  in  a  state  of  intoxication. 

4.  Provided,  however,  that  in  all  such  actions  against  an  employer 
who  is  not  a  subscriber,  as  defined  hereafter  in  this  act,  it  shall  be 
necessary  to  a  recovery  for  the  plaintiff  to  prove  negligence  of  such 
employer  or  some  agent  or  servant  of  such  employer  acting  within  the 
general  scope  of  his  employment.     (Acts  35th  Leg.,  Chap.  103,  Sec.  1, 
Part  I.) 

Exemption    of    Certain    Laborers — Employers    With    Three    or    More    Em- 
ployes Subject  to  the  Provisions  of  This  Act. 

298.  The  provisions  of  this  act  shall  not  apply  to  actions  to  recover 
damages  for  the  personal  injuries  nor  for  death  resulting  from  per- 
sonal injuries  sustained  by  domestic  servants,  farm  laborers,  ranch  labor- 
ers, nor  to  employes  of  any  firm,  person,  or  corporation  having  in  his 


INSURANCE  LAWS  OF  TEXAS.  Ill 

or  their  employ  less  than  three  (3)  employes,  nor  to  the  employes  of 
any  person,  firm  or  corporation  operating  any  steam,  electric,  street  or 
interurban  railway  as  a  common  carrier;  provided,  that  any  employer 
of  three  or  more  employes  at  the  time  of  becoming  a  subscriber  shall 
remain  a  subscriber  subject  to  all  the  rights,  liabilities,  duties  and  ex- 
emptions of  such,  notwithstanding  after  having  become  a  subscriber  the 
number  of  employes  may  at  times  be  less  than  three.  (Acts  37th  Leg., 
Chap.  115,  Sec.  2,  Part  I.) 

Note. —  (1)  A  waitress  at  a  fashionable  club  ib  not  a  domestic  servant. 
(Opinion  of  Attorney  General,  October  20,  1915.) 

(2)  A   domestic   servant   is   one   in   actual   employ   of  the   master,    engaged 
principally  in  the  master's  household   duties,   and   is  actually  or   substantially 
a  member  of  the  household.      (Opinion  of  Attorney  General,  October  20,   1915.) 

(3)  Corporations   chartered  under   Subdivision   53,  Article    1121   of   the  Re- 
vised   Civil    Statutes,    as    terminal    railway    companies,    are   railway    companies 
operating  as  common  carriers  and  are  exempt  from  the  provisions  of  the  Work- 
men's Compensation  Act.      (Opinion  of  Attorney  General,  August  4,   1916.) 

No  Subscribing  Employer  Shall  Be  Subject  to  Any  Other  Liability  What- 
soever, Save  the  Compensation  Allowed  by  This  Act. 

299.  The  employes  of  a  subscriber  shall  have  no  right  of  action 
against  their  employer  for  damages  for  personal  injuries,  and  the  rep- 
resentatives and  beneficiaries  of  deceased  employes  shall  have  no  right 
of  action  against  such  subscribing  employer  for  damages  for  injuries 
resulting  in  death,  but  such   employes   and   their  representatives   and 
beneficiaries  shall  look  for  compensation  solely  to  the  association,  as 
the  same  is  hereinafter  provided  for;  provided  that  all  compensation 
allowed  under  the  succeeding  sections  herein  shall  be  exempt  from  gar- 
nishment,, attachment,  judgment  and  all  other  suits  or  claims,  and  no 
such  right  of  action  and  no  such  compensation  and  no  part  thereof  or 
of  either  shall  be  assignable,  except  as  otherwise  herein  provided,  and 
any  attempt  to  assign  the  same  shall  be  void.     (Acts  35th  Leg.,  Chap. 
103,  Sec.  3,  Part  I.) 

Note. — This  section  is  applicable  to  stock  companies.  If  a  subscriber  enters 
into  a  contract  with  an  independent  contractor  to  do  any  particular  work  of 
a  character  that  the  employes,  if  injured,  would  be  entitled  to  compensation 
under  employment  by  the  subscriber,  then  they  are  entitled  to  compensation. 
This  is  also  true  of  employes  of  a  sub-contractor.  The  independent  contractor, 
however,  is  not  liable  for  compensation  to  employes  of  his  sub-contractor.  (Opin- 
ion of  Attorney  General,  September  23,  1913.) 

Employe  May  Waive  Bights  Under  This  Law  by  Giving  Proper  Notice. 

300.  An  employe  of  a  subscriber  shall  be  held  to  have  waived  his 
right  of  action  at  common  law  or  under  any  statute  of  this  State  to 
recover  damages  for  injuries  sustained  in  the  course  of  his  employment 
if  he  shall  not  have  given  his  employer,  at  the  time  of  his  contract  of 
hire,  notice  in  writing  that  he  claimed  said  right  or  if  the  contract  of 
hire  was  made  before  the  employer  became  a  subscriber,,  if  the  employe 
shall  not  have  given  the  said  notice  within  five  (5)  days  of  notice  of 
such  subscription.     An  employe  who  has  given  notice  to  his  employer 
that  he  claimed  his  right  of  action  at  common  law  or  under  any  statute 
may  thereafter  waive  such  claim  by  notice  in  writing,  which  shall  take 
effect  five  (5)  days  after  its  delivery  to  his  employer  or  his  agent;  pro- 


INSURANCE  LAWS  OF  TEXAS. 

vided  further,  that  any  employe  of  a  subscriber  who  has  not  waived  his 
right  of  action  at  common  law  or  under  any  statute  to  recover  dam- 
ages for  injury  sustained  in  the  course  of  his  employment,  as  above 
provided  in  this  section,  shall,  as  well  as  his  legal  beneficiaries  and  rep- 
resentatives, have  his  or  their  cause  of  action  for  such  injuries  as  now 
exist  by  the  common  law  and  statutes  of  this  State,  which  action  shall 
be  subject  to  all  defenses  under  the  common  law  and  statutes  of  this 
State.  (Acts  35th  Leg.,  Chap.  103,  Sec.  3a,  Part  I.) 

Employe  Who  Has  Not  Given  the  Notice  of  Waiver  Is  Entitled  to  Com- 
pensation Herein  Provided. 

301.  If  an  employe  who  has  not  given  notice  of  his  claim  of  com- 
mon law  or  statutory  rights  of  action,  as  provided  in  Section  3a,  Part 
I,  of  this  act  (Sec.  300),  or  who  has  given  such  notice  and  waived  the 
same,  sustains  an  injury  in  the  course  of  his  employment,  he  shall  be 
paid  compensation  by  the  association  as  hereinafter  provided,  if  his 
employer  is  a  subscriber  at  the  time  of  the  injury.     (Acts  35th  Leg., 
Chap.  103,  Sec.  3b,  Part  I.) 

Employes  of  Non-Subscribing  Employers  Cannot  Participate  in  the  Ben- 
efits of  Compensation,  But  They  Shall  Be  Entitled  to  Bring  Suits. 

302.  Employes  whose  employers  are  not  at  the  time  of  the  injury 
subscribers  to  said  association,  and  the  representatives  and  beneficiaries 
of  deceased  employes  who  at  the  time  of  the  injury  were  working  for 
non-subscribing  employers  cannot  participate  in  the  benefits  of  said  in- 
surance association,  but  they  shall  be  entitled  to  bring  suit  and  may 
recover  judgment  against  such  employers,  or  any  of  them,  for  all  dam- 
ages sustained  by  reason  of  any  personal  injury  received  in  the  course  of 
employment  or  by  reason  of  death  resulting  from  such  injury,  and  the 
provisions  of  Section  1  of  this  act  (Sec.  296)   shall  be  applied  in  all 
such  actions.     (Acts  35th  Leg.,  Chap.  103,  Sec.  4,  Part  I.) 

Bight  to  Recover  for  Exemplary  Damages  Not  Prohibited  by  .This  Act. 

303.  Nothing  in  this  act  shall  be  taken  or  held  to  prohibit  the  re- 
covery of  exemplary  damages  by  the  surviving  husband,  wife,  heirs  of 
his  or  her  body,'  or  such  of  them  as  there  may  be  of  any  deceased  em- 
ploye whose  death  is  occasioned  by  homicide  from  the  wilful  act  or 
omission  or  gross  negligence  of  any  person,  firm  or  corporation  from 
the  employer  of  such  employe  at  the  time  of  the  injury  causing  the 
death  of  the  latter.     Provided,  that  in  any  suit  so  brought  for  exem- 
plary damages  the  trial  shall  be  de  novo,  and  no  presumption  shall  exist 
that  any  -award,  ruling  or  finding  of  the  Industrial  Accident  Board 
was  correct;  and  in  such  suit  brought  by  the  employe  or  his  legal  heirs 
or  representatives  against  such  association   or  employer,   such   award, 
ruling  or  finding  shall  neither  be  pleaded  nor  introduced  in  evidence. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  5,  Part  I.) 

No  Compensation  Paid  for  Less  Than  One  Week's  Disability,  Beginning 
on  Eighth  Day — Medical  Aid,  Hospital  Services  and  Medicines  Fur- 
nished as  Needed. 

304.  No  compensation  shall  be  paid  under  this  act  for  an  injury 
which  does  not  incapacitate  the  employe  for  a  period  of  at  least  one 


INSURANCE  LAWS  OF  TEXAS.  113 

week  from  earning  full  wages,  but  if  incapacity  extends  beyond  one 
week,  compensation  shall  begin  to  accrue  on  the  eighth  day  after  the 
injury.  Provided,  however,  the  medical  aid,  hospital  services,  and  medi- 
cines, as  provided  for  in  Section  7  hereof  (Sec.  305)  shall  be  supplied 
as  and  when  needed  and  according  to  the  terms  and  provisions  of  said 
Section  7  (Sec.  305).  And  provided  further,  that  if  incapacity  does 
not  follow  at  once  after  the  infliction  of  the  injury  or  within  eight  (8) 
days  thereof,  but  does  result  subsequently  that  compensation  shall  begin 
to  accrue  with  the  eighth  day  after  the  date  incapacity  commenced. 
In  any  event  the  employe  shall  be  entitled  to  the  medical  aid,  hospital 
services  and  medicines  as  provided  elsewhere  in  this  act.  (Acts  35th 
Leg.,  Chap.  103,  Sec.  6,  Part  I.) 

Note. — Compensation  does  not  begin  until  the  eighth  day  after  the  injury. 
The  compensation  provided  in  the  law  shall  be  full  and  complete  compensation. 
(Opinion  of  Attorney  General,  October  3,  1913.) 

Medical  Aid,  Hospital  Services  and  Medicines  Are  to  Be  Furnished. 

305.  During  the  first  two  weeks  of  the  injury,  dating  from  the  date 
of  its  infliction,  the  association  shall  furnish  reasonable  medical  aid, 
hospital  services  and  medicines.     If  the  association  fails  to  so  furnish 
same  as  and  when  needed  during  the  time  specified,  after  notice  of  the 
injury  to  the  association  or  subscriber,  the  injured  employe  may  pro- 
vide said  medical  aid,  hospital  services  and  medicines  at  the  cost  and 
expense  of  the  association.     The  employe  shall  not  be  entitled  to  re- 
cover any  amount  expended  or  incurred  by  him  for  said  medical  aid, 
hospital  services  or  medicines  nor  shall  any  person  who  supplied  the 
same  be  entitled  to  recover  of  the  association  therefor,  unless  the  asso- 
ciation or  subscriber  shall  have  had  notice  of  the  injury  and  shall  have 
refused,  failed  or  .neglected  to  furnish  it  or  them  within  a  reasonable 
time.     Provided,  however,  that  at  the  time  of  the  injury  or  imme- 
diately thereafter,  if  necessary,  the  employe  shall  have  the  right  to  call 
in  any  available  physician  or  surgeon  to  administer  first-aid  treatment 
as  may  be  reasonably  necessary  at  the  expense  of  the  association.     Dur- 
ing the  second  or  any  subsequent  week  of  continuous  total  incapacity 
requiring  the   confinement  to  a  hospital,  the  association   shall,  upon 
application  of  the  attending  physician  or  surgeon  certifying  the  neces- 
sity therefor  to  the  Industrial  Accident  Board  and  to  the  association, 
furnish  such  additional  hospital  services  as  may  be  deemed  necessary, 
not  to  exceed  one  week,  unless  at  the  end  of  such  additional  week  the 
attending  physician  shall  certify  to  the  necessity  for  another  week  of 
hospital  services  or  so  much  thereof  as  may  be  needed;  provided,  how- 
ever, that  such  additional  hospital  services  as  are  provided  for  in  this 
paragraph  shall  not  be  held  to  include  any  obligation  on  the  part  of 
the  association  to  pay  for  medical  or  surgical  services  not  ordinarily 
provided  by  hospitals  as  a  part  of  their  services.      (Acts  35th  Leg., 
Chap.  103,  Sec.  7,  Part  I.) 

Board  Has  Authority  Under  Certain  Conditions  to  Change  Physician  or 
Other  Requirements. 

306.  If  it  be  shown  that  the  association  is  furnishing  medical  aid, 
hospital  services  and  medicines  provided  for  by  Section  7  hereof  (Sec. 


114  INSURANCE  LAWS  OF  TEXAS. 

305)  in  such  manner  that  there  is  reasonable  ground  for  believing  that 
the  life,  health  or  recovery  of  the  employe  is  being  endangered  or  im- 
paired thereby,  the  board  may  order  a  change  in  the  physician  or  other 
requirements  of  said  section,  and  if  the  association  fails  promptly  to 
comply  with  such  order  after  receiving  it,  the  board  may  permit  the 
employe  or  some  one  for  him  to  provide  the  same  at  the  expense  of  the 
association  under  such  reasonable  regulations  as  may  be  provided  by 
said  board.     (Acts  35th  Leg.,  Chap.  103,  Sec.  7a,  Part  I.) 

Charges  for  Medical  Aid,  Hospital  Services  and  Medicine  Must  Be  Rea- 
sonable. 

307.  All  fees  and  charges  under  Sections  7  and  7a  (Sees.  305  and 

306)  hereof  shall  be  fair  and  reasonable,  shall  be  subject  to  regulation 
of  the  board  and  shall  be  limited  to  such  charges  as  are  reasonable  for 
similar  treatment  of  injured  persons  of  a  like  standard  of  living  where 
such  treatment  is  paid  for  by  the  injured  person  himself  or  some  one 
acting  for  him.     In  determining  what  fees  are  reasonable,  the  board 
may  also  consider  the  increased  security  of  payment  afforded  by  this 
act.     Where  such  medical  aid,  hospital  service  or  medicines  are  fur- 
nished by  a  public  hospital  or  other  institution,  payment  thereof  shall 
be  made  to  the  proper  authorities  conducting  the  same,  and  the  amount 
so  paid  shall  be  promptly  reported  to  the  board.     (Acts  35th  Leg., 
Chap.  103,  Sec.  7b,  Part  I.) 

Fees  for  Legal  Services  Subject  to  Approval  of  Board. 

308.  All   fees   of   attorneys  for   representing   claimants   before   the 
board  under  the  provisions  of  this  act  shall  be  subject  to  the  approval 
of  the  board.     No  attorney's  fees  for  representing  claimants  before  the 
board  shall  be  allowed  or  approved  against  any  party  or  parties  not  rep- 
resented by  such  attorney,  nor  exceeding  an  amount  equal  to  15  per 
cent  of  the  amount  of  the  first  one  thousand  dollars  or  fraction  thereof 
recovered,  nor  10  per  cent  of  the  excess  of  such  recovery,  if  any,  over 
one  thousand  dollars.     And  in  addition  to  the  reasonable  expense  in- 
curred by  the  attorney  in  the  preparation  and  presentation  of  the  said 
claim  before  the  board,  such  expenses  to  be  allowed  by  the  board;  fur- 
ther provided,  that  where  an  attorney  represents  only  a  part  of  those 
interested  in  the  allowance  of  a  claim  before  the  board  and  his  services 
in  prosecuting  such  claim  and  obtaining  an  award  therein  inures  to 
the  benefit  of  others  jointly  interested  therein,  then  the  board  may  take 
these  facts  into  consideration  and  allow  the  attorney  a  reasonable  charge, 
to  be  assessed  against  the  interest  of  those  receiving  benefits  of  the  serv- 
ice of  such  attorney.     The  attorney's  fees  herein  provided  for  may  be 
redeemed  by  the  association  by  the  payment  of  a  lump  sum  or  may  be 
commuted  by  agreement  of  the  parties  subject  to  the  approval  of  the 
board,  but  not  until  the  claim  represented  by  said  attorney  has  been 
finally  determined  by  the  board  and  recognized  and  accepted  by  the 
association.     After  the  approval,  as  first  above  provided  for,  if  the  as- 
sociation be  notified  in  writing  of  such  claim  or  agreement  for  legal 
services,  the  same  shall  be  a  lien  against  any  amount  thereafter  to  be 
paid  as  compensation ;  provided,  however,  that  where  the  employe's  com- 
pensation is  payable  by  the  association  in  periodical  installments,  the 
board  shall  fix  at  the  time  of  approval  the  proportion  of  each  install- 


INSURANCE  LAWS  OF  TEXAS.  115 

ment  to  be  paid  on  account  of  said  legal  services.     (Acts  35th  Leg., 
Chapter  103,  Sec.  7c,  Part  I.) 

Attorney's  Fee   for  Representing   Claimant's   Interest   Carried   From   the 
Board  to  the  Courts  Cannot  Exceed  One-third  of  Amount  Recovered. 

309.  For  representing  the  interest  of  any  claimant  in  any  manner 
carried  from  the  board  into  the  courts,  it  shall  be  lawful  for  the  attor- 
neys representing  such  interest  to  contract  with  any  of  the  beneficiaries 
under  this  act  for  an  attorney's  fee  for  such  representation,  not  to  ex- 
ceed one-third  (£)  of  the  amount  recovered,  such  fees  for  services  so 
rendered  to  be  fixed  and  allowed  by  the  trial  court,  in  which  such  mat- 
ter may  be  heard  and  determined.     (Acts  35th  Leg.,  Chap.  103,  Sec. 
7d,  Part  I.) 

Compensation  Payable  to  Legal   Beneficiary  When  Death   Results  From 
the  Injury. 

310.  If  death  should  result  from  the  injury,  the  association  herein- 
after created  shall  pay  the  legal  beneficiaries  of  the  deceased  employe 
a  weekly  payment  equal  to  60  per  cent  of  his  average  weekly  wages, 
but  not  more  than  $15  nor  less  than  $5  a  week,  for  a  period  of  three 
hundred  and  sixty  weeks  from  the  date  of  the  injury.     (Acts  35th  Leg., 
Chap.  103,  Sec.  8,  Part  I.) 

Beneficiaries  of  Compensation  Where  Death  Results. 

311.  The  compensation  provided  for  in  the  foregoing  section  of  this 
act  shall  be  for  the  sole  and  exclusive  benefit  of  the  surviving  husband 
who  has  not,  for  good  cause,  and  for  a  period  of  three  years  prior 
thereto,  abandoned  his  wife  at  the  time  of  the  injury,  the  wife  who 
has  not,  at  the  time  of  the  injury,  without  good  cause,  and  for  a  period 
of  three  years  prior  thereto,  abandoned  her  husband  and  the  minor  chil- 
dren, without  regard  to  the  question  of  dependency,  dependent  parents, 
and  dependent  grandparents  and  dependent  stepmothers  and  dependent 
children  or  dependent  brothers  and  sisters  of  the  deceased  employe,  and 
the  amount  recovered  thereunder  shall  not  be  liable  for  the  debts  of  the 
deceased  nor  for  the  debts  of  the  beneficiary  or  beneficiaries,  and  shall 
be  distributed  among  such  beneficiaries  as  may  be  entitled  to  same  as 
hereinbefore  provided  according  to  the  laws  of  descent  and  distribution 
of  this  State;  and  provided,  such  compensation  shall  not  pass  to  the 
estate  of  the  deceased  to  be  administered  upon,  but  shall  be  paid  directly 
to  said  beneficiaries  when  the  same  are  capable  of  taking,  under  the 
laws  of  the  State,  or  to  their  guardian  or  next  friend,  in  -case  of  lunacy, 
infancy  or  other  disqualifying  cause  of  any  beneficiary.     And  the  com- 
pensation provided  for  in  this  act  shall  be  paid  weekly  to  the  bene- 
ficiaries herein  named  and  specified,  subject  to  the  other  provisions  of 
this  act.     (Acts  35th  Leg.,  Chap.  103,  Sec.  8a,  Part  I.) 

Compensation,  Hx*w  Divided  Where  Death  Results  After  a  Period  of  In- 
capacity. 

312.  In  case  death  occurs  as  a  result  of  the  injury  after  a  period  of 
total  or  partial  incapacity,  for  which  compensation  has  been  paid,  the 
period  of  incapacity  shall  be  deducted  from  the  total  period  of  com- 
pensation and  the  benefits  paid  thereunder  from  the  maximum  allowed 


116  INSURANCE  LAWS  OF  TEXAS. 

for  the  death,  respectively,  stated  in  this  act.     (Acts  35th  Leg..  Chap. 
103,  Sec.  8b,  Part  I.) 

Compensation  Where  No  Legal  Beneficiaries  Are  Left — Burial  Expenses. 

313.  If  the  deceased  employe  leaves  no  legal  beneficiary,  the  asso- 
ciation shall  pay  all  expenses  incident  to  his  last  sickness  as  a  result  of 
the  injury  and  in  addition  a  funeral  benefit  not  to  exceed  $100;  pro- 
vided, however,  that  where  any  deceased  employe  leaves  legal  bene- 
ficiaries, but  who  is  buried  at  the  expense  of  his  employer  or  any  other 
person,  the  expense  of  such  burial,  not  to  exceed  $100,  shall  be  payable 
out  of  the  compensation  due  the  beneficiary  or  beneficiaries  of  such  de- 
ceased employe,  subject  to  the  approval  of  the  board.  '  (Acts  35th  Leg., 
Chap.  103,  Sec.  9,  Part  I.) 

Compensation  and  Length  of  Time  in  the  Event  of  Total  Disability. 

314.  While  the  incapacity  for  work  resulting  from  injury  is  total, 
the  association  shall  pay  the  injured  employe  a  weekly  compensation 
equal  to  60  per  cent  of  his  average  weekly  wages,  but  not  more  than 
$15  nor  less  than  $5,  and  in  no  case  shall  the  period  covered  by  such 
compensation  be  greater  than  four  hundred  and  one  (401)  weeks  from 
the  date  of  the  injury.     (Acts  35th  Leg.,  Chap.  103,  Sec.  10,  Part  I.) 

Compensation  and  Length  of  Time  in  the  Event  of  Partial  Disability. 

315.  While  the  incapacity  for  work  resulting  from  the  injury   is 
partial,  the  association  shall  pay  the  injured  employe  a  weekly  com- 
pensation equal  to  60  per  cent  of  the  difference  between  his  average 
weekly  wages  before  the  injury  and  his  average  weekly  wage-earning 
capacity   during  the   existence  of  such   partial   incapacity,   but  in   no 
case  more  than  $15  per  week,  and  the  period  covered  by  such  compen- 
sation to  be  in  no  case  greater  than  three  hundred  weeks;  provided, 
that  in  no  case  shall  the  period  of  compensation  for  total  and  partial 
incapacity  exceed  four  hundred  and  one  (401)  weeks  from  the  date  of 
the  injury.     (Acts  35th  Leg.,  Chap.  103,  Sec.  11,  Part  I.) 

Total  and  Permanent  Incapacity  Defined. 

316.  In  cases  of  the  following  injuries,  the  incapacity  shall  conclu- 
sively be  held  to  be  total  and  permanent,  towit : 

(1)  The  total  and  permanent  loss  of  the  sight  in  both  eyes. 

(2)  The  loss  of  both  feet  at  or  above  the  ankle. 

(3)  The  loss  of  both  hands  at  or  above  the  wrist. 

(4)  A  similar  loss  of  one  hand  and  one  foot. 

(5)  An  injury  to  the  spine  resulting  in  permanent  and  complete 
paralysis  of  both  arms  or  both  legs  or  of  one  arm  and  one  leg. 

(6)  An  injury  to  the  skull  resulting  in  incurable  insanity  or  im- 
becility. 

In  any  of  the  above  enumerated  cases  it  shall  be  considered  that  the 
total  loss  of  the  use  of  a  member  shall  be  equivalent  to  and  draw  the 
same  compensation  during  the  time  of  such  total  loss  of  the  use  thereof 
as  for  the  total  and  permanent  loss  of  such  member. 

The  above  enumeration  is  not  to  be  taken  as  exclusive,  but  in  all 
other  cases  the  burden  of  proof  shall  be  on  the  claimant  to  prove  that 


INSURANCE  LAWS  or  TEXAS.  117 

his  injuries  have  resulted  in  permanent,  total  incapacity.     (Acts  35th 
Leg.,  Chap.  103,  Sec.  lla,  Part  I.) 

Compensation  for  Specified  Injuries. 

317.  For  the  injuries  enumerated  in  the  following  schedule  the  em- 
ploye shall  receive  in  lieu  of  all  other  compensation  except  medical  aid, 
hospital  services  and  medicines,  as  elsewhere  herein  provided,  a  weekly 
compensation  equal  to  60  per  cent  of  the  average  weekly  wages  of 
such  employe,  but  not  less  than  $5  per  week  nor  exceeding  $15  per 
week  for  the  respective  periods  stated  herein,  towit: 

For  the  loss  of  a  thumb,  60  per  cent  of  the  average  weekly  wages 
during  sixty  weeks. 

For  the  loss  of  a  first  finger,  commonly  called  the  index  finger,  60 
per  cent  of  the  average  weekly  wages  during  forty-five  weeks. 

For  the  loss  of  a  second  finger,  60  per  cent  of  the  average  weekly 
wages  during  •  thirty  weeks. 

For  the  loss  of  a  third  finger,  60  per  cent  of  the  average  weekly 
wages  during  twenty-one  weeks. 

For  the  loss  of  a  fourth  finger,  commonly  known  as  the  little  finger, 
60  per  cent  of  the  average  weekly  wages  during  fifteen  weeks. 

The  loss  of  the  second  or  distal  phalange  of  the  thumb  shall  be  con- 
sidered to  be  equal  to  the  loss  of  one-half  of  such  thumb;  the  loss  of 
more  than  one-half  of  such  thumb  shall  be  considered  to  be  equal  to 
the  loss  of  the  whole  thumb. 

The  loss  of  the  third  or  distal  phalange  of  any  finger  shall  be  con- 
sidered to  be  equal  to  the  loss  of  one-third  of  such  finger. 

The  loss  of  the  middle  or  second  phalange  of  any  finger  shall  be  con- 
sidered to  be  equal  to  the  loss  of  two-thirds  of  such  finger. 

The  loss  of  more  than  the  middle  or  distal  phalange  of  any  finger 
shall  be  considered  to  be  equal  to  the  loss  of  the  whole  finger;  pro- 
vided, however,  that  in  no  case  shall  the  amount  received  for  the  loss 
of  a  thumb  and  more  than  one  finger  on  the  same  hand  exceed  the 
amount  provided  in  this  schedule  for  the  loss  of  a  hand. 

For  the  loss  of  the  metacarpal  bone  (bone  of  palm),  for  the  corre- 
sponding thumb,  finger,  or  fingers  above,  add  ten  weeks  to  the  number 
of  weeks  as  above,  subject  to  the  limitation  that  in  no  case  shall  the 
amount  received  for  the  loss  or  injury  to  any  one  hand  be  more  than 
for  the  loss  of  the  hand. 

For  ankylosis  (total  stiffness  of)  or  contracture  (due  to  sears  or  in- 
juries), which  make  the  fingers  useless,  the  same  number  of  weeks  shall 
apply  to  such  finger  or  fingers  or  parts  of  fingers  (not  thumb)  as  given 
above. 

For  the  loss  of  a  hand,  60  per  cent  of  the  average  weekly  wages 
during  one  hundred  and  fifty  weeks. 

For  the  loss  of  an  arm,  at  or  above  the  elbow,  60  per  cent  of  the 
average  weekly  wages  during  two  hundred  weeks. 

For  the  loss  of  one  of  the  toes,  other  than  the  great  toe,  60  per 
cent  of  the  average  weekly  wages  during  ten  weeks. 

For  the  loss  of  the  great  toe,  60  per  cent  of  the  average  weekly 
wages  during  thirty  weeks. 

The  loss  of  more  than  two-thirds  of  any  toe  shall  be  considered  to 
be  equal  to  the  loss  of  the  whole  toe. 


118  INSURANCE  LAWS  OF  TEXAS. 

The  loss  of  less  than  two-thirds  of  any  toe  shall  be  considered  to  be 
equal  to  the  loss  of  one-half  of  the  toe. 

For  the  loss  of  a  foot,  60  per  cent  of  the  average  weekly  wages 
during  one  hundred  and  twenty-five  weeks. 

For  the  loss  of  a  leg  at  or  above  the  knee,  60  per  cent  of  the  aver- 
age weekly  wages  during  two  hundred  weeks. 

For  the  total  and  permanent  loss  of  the  sight  of  one  eye,  60  per 
cent  of  the  average  weekly  wages  during  one  hundred  weeks. 

In  the  foregoing  enumerated  cases  of  permanent,  partial  incapacity, 
it  shall  be  considered  that  the  permanent  loss  of  the  use  of  a  member 
shall  be  equivalent  to  and  draw  the  same  compensation  as  the  loss  of 
that  member. 

For  the  complete  and  permanent  loss  of  the  hearing  in  both  ears, 
60  per  cent  of  the  weekly  wages  during  one  hundred  and  fifty  weeks. 

For  the  loss  of  an  eye  and  leg  above  the  knee,  60  per  cent  of  the 
average  weekly  wages  during  a  period  of  three  hundred  and  fifty  weeks. 

For  the  loss  of  an  eye  and  an  arm  above  the  elbow,  60  per  cent  of 
the  average  weekly  wages  during  a  period  of  three  hundred  and  fifty 
weeks. 

For  the  loss  of  an  eye  and  a  hand,  60  per  cent  of  the  average 
weekly  wages  during  a  period  of  three  hundred  and  twenty-five  weeks. 

For  the  loss  of  an  eye  and  a  foot,  60  per  cent  of  the  average  weekly 
wages  during  a  period  of  three  hundred  weeks. 

Where  the  employe  sustains  concurrent  injuries  resulting  in  concur- 
rent incapacities,  he  shall  receive  compensation  only  for  the  injury 
which  produces  the  longest  period  of  incapacity;  but  this  section  shall 
not  affect  liability  for  the  concurrent  loss  or  the  loss  or  the  use  thereof 
of  more  than  one  member,  for  which  members  compensation  is  pro- 
vided in  this  schedule;  compensation  for  specific  injuries  under  this  act 
shall  be  cumulative  as  to  time  and  not  concurrent. 

In  all  cases  of  permanent,  partial  incapacity,  it  shall  be  considered 
that  the  permanent  loss  of  the  use  of  the  member  be  equivalent  to  and 
draw  the  same  compensation  as  the  loss  of  that  member;  but  the  com- 
pensation in  and  by  said  schedule  provided  shall  be  in  lieu  of  all  other 
compensation  in  such  cases. 

In  all  other  cases,  partial  incapacity,  including  any  disfigurement 
which  will  impair  the  future  usefulness  or  occupational  opportunities 
of  the  injured  employe,  compensation  shall  be  determined  according  to 
the  percentage  of  incapacity,  taking  into  account,  among  other  things, 
any  previous  incapacity,  the  nature  of  the  physical  injury  or  disfigure- 
ment, the  occupation  of  the  injured  employe,  and  the  age  at  the  time 
of  the  injury;  the  compensation  paid  therefor  shall  be  60  per  cent 
of  the  average  weekly  wages  of  the  employe,  but  not  to  exceed  $15  per 
week,  multiplied  by  the  percentage  of  incapacity  caused  by  the  injury 
for  such  period  as  the  board  may  determine  not  exceeding  three  hun- 
dred weeks.  Whenever  the  weekly  payments  under  this  paragraph  would 
be  less  than  $3  per  week,  the  period  may  be  shortened,  and  the  pay- 
ments correspondingly  increased  by  the  board.  (Acts  35th  Leg.,  Chap. 
103,  Sec.  12,  Part  I.) 


INSURANCE  LAWS  OF  TEXAS.  119 

Where  Injured  Employe  Refuses  Employment  Suitable  to  His  Physical 
Condition. 

318.  If  the  injured  employe  refuses  employment  reasonably  suited  to 
his  incapacity  and  physical  condition,  procured  for  him  in  the  locality 
where  injured  or  at  a  place  agreeable  to  him,  he  shall  not  be  entitled 
to  compensation  during  the  period  of  such  refusal,  unless  in  the  opin- 
ion of  the  board  such  refusal  is  justifiable.    This  section  shall  not  apply 
in  cases  of  specific  injuries  for  which  a  schedule  is  fixed  by  this  act. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  12a,  Part  I.) 

Requirements  in  Claims  for  Hernia. 

319.  In  all  claims  for  hernia  resulting  from  injury  sustained  in  the 
course  of  employment,  it  must  be  definitely  proven  to  the  satisfaction 
of  the  board: 

First.     That  there  was  an  injury  resulting  in  hernia. 

Second.     That  the  hernia  appeared"  suddenly  and  immediately  fol- 
lowing the  injury. 

Third.     That  the  hernia  did  not  exist  in  any  degree  prior  to  the  in- 
jury for  which  compensation  is  claimed.    . 

Fourth.     That  the  injury  was  accompanied  by  pain. 

In  all  such  cases  where  liability  for  compensation  exists,  the  associa- 
tion shall  provide  competent  surgical  treatment  by  radical  operation. 

In  case  the  injured  employe  refuses  to  submit  to  the  operation,  the 
board  shall  immediately  order  a  medical  examination  of  such  employe 
by  a  physician  or  physicians  of  its  own  selection  at  a  time  and  place  to 
be  by  them  named,  at  which  examination  the  employe  and  the  associa- 
tion, or  either  of  them,  shall  have  the  right  to  have  his  or  their  physi- 
cian present.  The  physician  or  physicians  so  selected  shall  make  to 
the  board  a  report  in  writing,  signed  and  sworn  to,  setting  forth  the 
facts  developed  at  such  examination  and  giving  his  or  their  opinion  as 
to  the  advisability  or  non-advisability  of  an  operation.  If  it  be  shown 
to  the  board  by  such  examination  and  the  written  report  thereof  and 
the  expert  opinions  thereon  that  the  employe  has  any  chronic  disease  or 
is  otherwise  in  such  physical  condition  as  to  render  it  more  than  or- 
dinarily unsafe  to  submit  to  such  operation,  he  shall,  if  unwilling  to 
submit  to  the  operation,  be  entitled  to  compensation  for  incapacity 
under  the  general  provisions  of  this  act.  If  the  examination  and  the 
written  report  thereof  and  the  expert  opinions  thereon  then  on  file  be- 
fore the  board  do  not  show  to  the  board  the  existence  of  disease  or 
other  physical  condition  rendering  the  operation  more  than  ordinarily 
unsafe,  and  the  board  shall  unanimously  so  find  and  so  reduce  its  find- 
ings to  writing  and  file  the  same  in  the  case  and  furnish  the  employe 
and  the  association  with  a  copy  of  its  findings,  then  if  the  employe 
with  the  knowledge  of  the  result  of  such  examination,  such  report,  such 
opinions  and  such  findings,  thereafter  refuses  to  submit  within  a  rea- 
sonable time,  which  time  shall  be  fixed  in  the  findings  of  the  board,  to 
such  operation,  he  shall  be  entitled  to  the  compensation  for  incapacity 
under  the  general  provisions  of  this  act,  for  a  period  not  exceeding  one 
year. 

If  the  employe  submits  to  the  operation  and  the  same  is  successful, 
which  shall  be  determined  by  the  board,  he  shall  in  addition  to  the  sur- 
gical benefits  herein  provided  for  be  entitled  to  compensation  for  twenty- 


120  INSURANCE  LAWS  OF  TEXAS. 

six  weeks  from  the  date  of  the  operation.  If  such  operation  is  not  suc- 
cessful and  does  not  result  in  death,  he  shall  be  paid  compensation 
under  the  general  provisions  of  this  act  the  same  as  if  such  operation 
had  not  been  had;  other  than  in  determining  the  quantum  of  compen- 
sation to  be  paid  to  the  employe,  the  board  may  take  into  consideration 
any  minor  benefits  that  accrued  to  the  employe  by  reason  thereof  or 
any  aggravation  or  increased  injury  which  accrued  to  him  by  reason 
thereof. 

If  the  hernia  results  in  death  within  one  year  after  it  is  sustained, 
or  the  operation  results  in  death,  such  death  shall  be  held  a  result  of 
the  injury  causing  such  hernia  and  compensated  accordingly  under  the 
provisions  of  this  act.  This  paragraph  shall  not  apply  where  the  em- 
ploye has  wilfully  refused  to  submit  to  an  operation  which  has  been 
found  by  the  examination  herein  provided  for  not  to  be  more  than 
ordinarily  unsafe.  (Acts  35th  Leg.,  Chap.  103,  Sec.  12b,  Part  I.) 

In  Case  of  Subsequent  Injury  to  Employe  Where  Both  Injuries  Contribute 
to  Incapacity. 

320/  If  an  employe  who  has  suffered  a  previous  injury  shall  suffer  a 
subsequent  injury  which  results  in  a  condition  of  incapacity  to  which 
both  injuries  or  their  effects  have  contributed,  the  association  shall  be 
liable  because  of  such  injury  only  for  the  compensation  to  which  the 
subsequent  injury  would  have  entitled  the  injured  employe  had  there 
been  no  previous  injury.  (Acts  35th  Leg.,  Chap.  103,  Sec.  12c,  Part  I.) 

Board  May  Review  Any  Award  or  Order  Previously  Made. 

321.  Upon  its  own  motion  or  upon  the  application  of  any  person 
interested  showing  a  change  of  conditions,  mistake  or  fraud,  the  board 
at  any  time  within  the  compensation  period  may  review  any  award 'or 
order,    ending,    diminishing    or    increasing    compensation    previously 
awarded,  within  the  maximum  and  minimum  provided  in  this  act,  or 
change  or  revoke  its  previous  order  sending  immediately  to  the  parties 
a  copy  of  its  subsequent  order  or  award.     Eeview  under  this  section 
shall  be  only  upon  notice  to  the  parties  interested.     (Acts  35th  Leg., 
Chap.  103,  Sec.  12d,  Part  I.) 

An  Operation  May  Be  Demanded — Proceedings  in  Such  Case. 

322.  In  all  cases  where  liability  for  compensation  exists  for  an  in- 
jury sustained  by  an  employe  in  the  course  of  his  employment  and  a 
surgical  operation  for  such  injury  will  effect  a  cure  of  the  employe  or 
will  materially  and  beneficially  improve  his  condition,  the  association 
or  the  employe  may  demand  that  a  surgical  operation  be  had  upon  the 
employe  as  herein  provided,  and  the  association  shall  provide  and  pay 
for  all  necessary  surgical  treatment,  medicines  and  hospital  services  in- 
cident to  the  performance  of  said  operation;  provided  the  same  is  had. 
In  case  either  of  said  parties  demands  in  writing  to  the  board  such 
operation,  the  board  shall  immediately  order  a  medical  examination  of 
the  employe  in  the  same  manner  as  is  provided  for  in  the  section  of 
this  act  relating  to  hernia.     If  it  be  shown  by  the  examination,  report 
of  facts  and  opinions  of  experts,  all  reduced  to  writing  and  filed  with 
the  board,  that  such  operation  is  advisable  and  will  relieve  the  condi- 


INSURANCE  LAWS  OF  TEXAS.  121 

tion  of  the  injured  employe  or  will  materially  benefit  him,  the  board 
shall  so  state  in  writing,  and  upon  unanimous  order  of  said  board,  in 
writing,  a  copy  of  which  shall  be  delivered  to  the  employe  and  the  as- 
sociation, shall  direct  the  employe  at  a  time  and  place  therein  stated  to 
submit  himself  to  an  operation  for  said  injury.  If  the  board  should  find 
that  said  operation  is  not  advisable,  then  the  employe  shall  continue  to 
be  compensated  for  his  incapacity  under  the  general  provisions  of  this 
act.  If  the  board  shall  unanimously  find  and  so  state  in  writing  that 
said  operation  is  advisable,  it  shall  make  its  order  to  that  effect,  stat- 
ing the  time  and  place  when  and  where  such  operation  is  to  be  per- 
formed, naming  the  physicians  therein  who  shall  perform  said  opera- 
tion, and  if  the  employe  refuses  to  submit  to  such  operation,  the  board 
may  order  or  direct  the  association  to  suspend  the  whole  or  any  part 
of  his  compensation  during  the  time  of  said  period  of  refusal.  The 
results  of  such  operation,  the  question  as  to  whether  the  injured  em- 
ploye shall  be  required  to  submit  thereto  and  the  benefits  and  liabili- 
ties arising  therefrom,  shall  attach,  be  treated,  handled  and  determined 
by  the  board  in  the  same  way  as  is  provided  in  the  case  of  hernia  in 
this  act.  (Acts  35th  Leg.,  Chap.  103,  Sec.  12e,  Part  I.) 

Requirements  Where  a  Subscriber  or  the  Association  Has  a  Regularly 
Employed  Physician. 

323.  In  all  cases  where  a  subscriber  or  the  association  has  in  his  or 
its  employ  a  physician  or  physicians  regularly  paid  in   any  manner 
whatsoever  by  such  subscriber  or  association  to  administer  to  or  treat 
injured  employes,  the  name  or  names  of  such  physicians  at  the  date  of 
employment  of  the  same  shall  be  filed  with  the  board,  together  with 
a  copy  of  the  contract  of  such  employment.     If  the  contract  of  such 
physician  or  physicians  is  not  in  writing,  then  the  same  shall  be  re- 
duced to  writing  and  a  copy  thereof  filed  with  the  board.     Such  con- 
tract shall  state  fully  the  extent  and  scope  of  the  employment  and  the 
compensation  to  be  paid  such  physician  or  physicians.     If  the  associa- 
tion or  subscriber  wilfully  fails  or  refuses  to  comply  with  this  provi- 
sion of  this  act,  then  an  injured  employe  or  any  person  acting  for  him 
shall  have  the  right  to  provide  hospital  services,  medical  aid  and  medi- 
cine for  said  injured  employe,  at  the  expense  of  and  the  same  shall  be 
charged  to  the  association,  and  the  subscriber  or  association  shall  notify 
the  employe  at  or  before  the  time  of  injury  what  physician  or  physi- 
cians are  contracted  with  to  treat  his  or  its  employes.     (Acts  35th  Leg., 
Chap.  103,  Sec.  12f,  Part  I.) 

Subscribers  or  Employers  Are  Prohibited  From  Collecting  Any  Part  of  a 
Premium  From  Their  Employes. 

324.  It  shall  be  unlawful  for  any  subscriber  or  any  employer  who 
seeks  to  comply  with  the  provisions  of  this  act  to  either  directly  or  in- 
directly collect  of  or  from  his  employes  by  any  means-  or  pretense  what- 
ever any  premium  under  this  act  or  part  thereof  paid  or  to  be  paid 
upon  any  policy  of  such  insurance  under  this  act  which  covers  such 
employes,  or  any  intended  policy  of  such  insurance  designed  to  cover 
such  employes,  and  if  any  such  subscriber  or  any  employer  of  labor  in 
this  State  violates  this  -provision  of  this  act,  then  any  employe  or  the 
legal  beneficiary  of  any  employe  of  such  employer  or  subscriber  shall 


122  INSURANCE  LAWS  OF  TEXAS. 

be  entitled  to  all  the  benefits  of  this  act  and  in  addition  thereto  shall 
have  a  separate  right  of  action  to  recover  damages  against  such  em- 
ployer without  regard  to  the  compensation  paid  or  to  be  paid  to  such 
employe  or  beneficiary  under  this  act,  and  the  association  shall  in  no- 
wise be  responsible  because  of  such  separate  action  by  such  employe 
or  beneficiary  against  such  employer  on  such  separate  cause  of  action. 
(Acts  '35th  Leg.,  Chap.  103,  Sec.  12g,  Part  I.) 

All  Contracts  of  Employers  Which  Attempt  to  Indemnify  Them  Account 
of  Injury  to  Employe  Must  Cover  Liability  for  Compensation  Pro- 
vided in  This  Act. 

325.  Every  contract  or  agreement  of  an  employer,  the  purpose  of 
which  is  to  indemnify  him  from  loss  or  damage  on  account  of  the  in- 
jury of  an  employe  by  accidental  means  or  on  account  of  the  negligence 
of  such  employer  or  his  officer,  agent  or  servant,  shall  be  absolutely 
void  unless  it  also  covers  liability  for  the  payment  of  the  compensation 
provided  for  by  this  act.  Provided,  that  this  section  of  this  act  shall 
not  apply  to  employers  of  labor  who  are  not  eligible  under  the  terms 
of  this  act  to  become  subscribers  thereto,  nor  to  employers  whose  em- 
ployes have  elected  to  reject  the  provisions  of  this  act,  nor  to  employers 
eligible  to  come  under  the  terms  of  this  act  who  do  not  elect  to  do  so, 
but  who  choose  to  carry  insurance  upon  their  employes  independently 
of  this  law  and  without  attempting  in  such  insurance  to  provide  com- 
pensation under  the  terms  of  this  act;  but  further  provided,  that  any 
evasion  of  this  section  whereby  an  insurance  company  shall  undertake, 
under  the  guise  of  writing  insurance  against  the  risk  of  the  employers 
who  do  not  see  proper  to  come  under  this  act,  to  write  insurance  sub- 
stantially or  in  any  material  respect  similar  to  the  insurance  provided 
for  by  this  act,  that  such  insurance  shall  be  void  as  provided  for  by 
the  foregoing  provisions  of  this  section.  (Acts  35th  Leg.,  Chap.  103, 
Sec.  12h,  Part  I.) 

Compensation  of  Injured  Minor  Employe  Whose  Wages  Would  Be  Ex- 
pected to  Increase. 

326.  If  it  be  established  that  the  injured  employe  was  a  minor  when 
injured  and  that  under  normal  conditions  his  wages  would  be  expected 
to  increase,  that  fact  may   be  considered  in   arriving   at   his   average 
weekly  wages,  and  compensation  may  be  fixed  accordingly.     This  sec- 
tion shall  not  be  considered  as  authorizing  the  employment  of  a  minor 
in  any  hazardous  employment  which  is  prohibited  by  any  statute  of  this 
State.     (Acts  35th  Leg.,  Chap.  103,  Sec.  12i,  Part  I.) 

Minors  or  Mentally  Incompetent  Injured  Workmen. 

327.  If  an  injured  employe  is  mentally  incompetent  or  is  a  minor 
or  is  under  any  other  disqualifying  cause  at  the  time  when  any  rights 
or  privileges  accrue  to  him  or  exist  under  this  act,  his  guardian  or  next 
friend  may  in  his  behalf  claim  and  exercise  such  rights  and  privileges 
except  as  otherwise  herein  provided. 

In  case  of  partial  incapacity  or  temporary  total  incapacity,  payment 
of  compensation  may  be  made  direct  to  the  minor  and  his  receipts 
taken  therefor,  if  the  authority  to  so  pay  and  receipt  for  said  compen- 


INSURANCE  LAWS  OF  TEXAS.  123 

sation  is  first  obtained  from  the  board.     (Acts  35th  Leg.,  Chap.  103, 
Sec.  13,  Part  I.) 

Employe  Cannot  Waive  Bight  to  Compensation. 

328.  No  agreement  by  any  employe  to  waive  his  rights  to  compen- 
sation under  this  act  shall  be  valid.     (Acts  35th  Leg.,  Chap.  103,  Sec. 
14,  Part  I.) 

Note. — Employers  of  labor  operating  under  the  Workmen's  Compensation  law 
cannot  cover  part  of  their  employes  and  leave  part  of  them  uncovered  where 
such  employes  are  engaged  in  the  same  general  business  or  enterprise.  (Opinion 
of  Attorney  General,  March  23,  1918.) 

Xiump  Sum  Payment. 

329.  In   cases   where  death  or  total  permanent  incapacity   results 
from  an  injury,  the  liability  of  the  association  may  be  redeemed  by 
payment  of  a  lump  sum  by  agreement  of  the  parties  thereto,  subject  to 
the  approval  of  the  Industrial  Accident  Board  hereinafter  created.    This 
section  shall  be  construed  as  excluding  any  other  character  of  lump  sum 
settlement  save  and  except  as  herein  specified;  provided,  however,  that 
in  special  cases  wherein  the  judgment  of  the  board  manifest  hardship 
and  injustice  would  otherwise  result,  the  board  may  compel  the  associa- 
tion in  the  cases  provided  for  in  this  section  to  redeem  their  liability 
by  payment  of  a  lump  sum  as  may  be  determined,  by  the  board.     (Acts 
35th  Leg.,  Chap.  103,  Sec.  15,  Part  I.) 

Board   May   Increase   Amount   of   Compensation   by   Correspondingly   De- 
creasing the  Number  of  Weeks. 

330.  In  any  case  where  compensation  is  payable  weekly  at  a  defi- 
nite sum  and  for  a  definite  period,,  and  it  appears  to  the  board  that  the 
amount  of  compensation  being  paid  is  inadequate  to  meet  the  necessi- 
ties of  the  beneficiary,  the  board  shall  have  the  power  to  increase  the 
amount  of  compensation  by  correspondingly  decreasing  the  number  of 
weeks  far  which  the  same  is  to  be  paid,  allowing  such  discount  to  the 
company  increasing  such  payments  as  is  applicable  in  cases  of  lump 
sum  settlement.     (Acts  35th  Leg.,  Chap.  103,  Sec.  15a,  Part  I.) 

Cause  of  Action  in  All  Death  Cases  Shall  Survive. 

331.  In  all  cases  of  injury  resulting  in  death,  where  such  injury 
was  sustained  in  the  course  of  employment,  cause  of  action  shall  sur- 
vive.    (Acts  35th  Leg.,  Chap.  103,  Sec.  16,  Part  I.) 

Alien  Beneficiaries  Entitled  to  Compensation. 

332.  Non-resident  alien  beneficiaries  and  resident  alien  beneficiaries 
shall  be  entitled  to  compensation  under  this  act.     Non-resident  alien 
beneficiaries  may  be  officially  represented  by  the  consular  officers  of  the 
nation  of  which  such  alien  or  aliens  may  be  citizens  or  subject,  and  in 
such  cases  the  consular  officers  shall  have  the  right  to  receive  for  dis- 
tribution   for   such    non-resident    alien    beneficiaries    all    compensation 
awarded  hereunder,  and  the  receipt  of  such  consular  officers  shall  be  a 
full  discharge  of  all  sums  paid  to  and  received  by  them.     The  associa- 
tion may  at  any  time  subject  to  the  approval  of  the  board  commute 


124  INSURANCE  LAWS  OF  TEXAS. 

all  future  installments  of  compensation  payable  to  alien  beneficiaries, 
not  residents  of  the  United  States,  by  paying  to  such  alien  beneficiaries 
the  sum  agreed  upon  and  filing  receipts  therefor  with  the  board.  (Acts 
35th  Leg.,  Chap.  103,  Sec.  17,  Part  I.) 

Certificate  of  Authority  of  Association  to  Do  Business  May  Be  Revoked 
for  Failure  to  Promptly  and  Regularly  Pay  Compensation. 

333.  It  is  the  purpose  of  this  act  that  the  compensation  herein  pro- 
vided for  shall  be  paid  from  week  to  week  and  as  it  accrues  and  directly 
to  the  person  entitled  thereto,  unless  the  liability  is  redeemed  as  in  such 
cases  provided  elsewhere  herein,  and,  if  the  association  wilfully  fails  or 
refuses  to  pay  compensation  as  and  when  the  same  matures  and  ac- 
crues, the  board  shall  notify  said  association  that  such  is  the  course  it 
is  pursuing,  and  if  after  such  notice  the  association  continues  to  wil- 
fully refuse  and  fail  to  meet  these  payments  of  compensation  as  pro- 
vided for  in  this  act,  the  board  shall  have  the  power  to  hold  that  such 
association  is  not  complying  with  the  provisions  of  this  act.    And  shall 
certify  such  fact  to  the  Commissioner  of  Insurance  and  Banking,  and 
said  certificate  shall  be  sufficient  cause  to  justify  said  Commissioner  of 
Insurance  and  Banking  to  revoke  or  forfeit  the  license  or  permit  of 
such  association  to  do  business  in  Texas ;  provided,  said  power  of  the 
board  shall  not  be  held  to  deny  the  association  the  right  to  bring  suit 
or  suits  to  set  aside  any  ruling,  order  or  decision  of  the  board.     (Acts 
35th  Leg.,  Chap.  103,  Sec.  18,  Part  I.) 

An  Employe,  Hired  in  This  State,  But  Receiving  an  Injury  Outside  the 
State,  Is  Entitled  to  Compensation. 

334.  If  an  employe  who  has  been  hired  in  this  State  sustained  in- 
jury in  the  course  of  his  employment,  he  shall  be  entitled  to  compen- 
sation according  to  the  law  of  this  State,  even  though  such  injury  was 
received  outside  of  the  State.     (Acts  35th  Leg.,  Chap.  103,  Sec.  19, 
Part  I.) 

PAET  II. 

Industrial  Accident  Board — How  Created — Term  of  Office. 

335.  There  shall  be  an  Industrial  Accident  Board  consisting  of  three 
members,  and  the  same  is  hereby  created  to  be  appointed  by  the  Gov- 
ernor, one  of  whom  shall  be  chairman,  and  said  board  shall  have  the 
powers,   duties  and  functions  hereinafter   conferred.     Beginning   with 
September  1,  1917,  one  member  thereof  shall  be  appointed  for  a  term 
of  two  years,  one  for  four  years,  and  one  for  six  years;  thereafter  the 
term  of  office  for  members  of  the  board  shall  be  six  years.     Appoint- 
ments to  fill  vacancies  on  the  board  shall  be  for  the  unexpired  term. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  1,  Part  II.) 

Composition  of  Board. 

336.  One  member  of  the  Industrial  Accident  Board  shall  be  at  the 
time  of  his  appointment  an  employer  of  labor  in  some  industry  or  busi- 
ness covered  by  this  act;  one  shall  be  at  the  time  of  his  appointment 
employed  in  some  business  industry  as  a  wage-earner,  and  the  third 
member  shall  be  at  the  time  of  his  appointment  a  practicing  attorney 


INSURANCE  LAWS  OF  TEXAS.  125 

of  recognized  ability,  said  member  to  act  in  the  capacity  of  legal  ad- 
viser to  the  board,  in  addition  to  his  other  duties  as  a  member  thereof, 
and  to  be  chairman  of  said  board.  (Acts  35th  Leg.,  Chap.  103,  Sec. 
2,  Part  II.) 

Salaries  of  Board  Members  and  Appointed  Secretary,   Clerical  Help  and 
Other  Expenses. 

337.  The  salaries  and  expenses  of  the  Industrial  Accident  Board 
shall  be  paid  by  the  State.     The  salaries  of  the  said  members  of  the 
board  shall  be  as  follows:     For  the  chairman  of  said  board,  $3000  per 
year,  and  for  each  of  the  other  members  thereof  $2500,  payable  in  equal 
monthly  installments.     The  board  may  appoint  a  secretary  at  a  salary 
not  to  exceed  $2000  a  year. 

And  may  appoint  such  other  clerical  and  other  assistants  as  may  be 
necessary  to  properly  administer  this  act.  It  shall  also  be  allowed  an 
annual  sum,  the  amount  to  be  determined  by  the  Legislature,  for  cler- 
ical and  other  services,  office  equipment,  traveling  and  all  other  neces- 
sary expenses.  The  board  shall  be  provided  suitable  offices  in  the  Cap- 
itol or  some  convenient  building  in  the  city  of  Austin  where  its  records 
shall  be  kept. 

The  members  of  said  board,  or  any  employe  thereof,  shall  have  the 
right  to  travel  upon  free  railroad  transportation  in  the  prosecution  of 
the  duties  of  their  respective  offices  in  the  State  of  Texas  without  vio- 
lating any  provision  of  the  anti-pass  laws  of  this  State,  and  any  rail- 
road company  issuing  such  transportation  shall  not  be  deemed  nor  held 
to  have  violated  any  law  of  this  State  by  reason  thereof.  (Acts  35th 
Leg.,  Chap.  103,  Sec.  3,  Part  II.) 

Board  May  Make  Rules,  Regulations  and  Decisions. 

338.  The  board  may  make  rules  not  inconsistent  with  this  act  for 
carrying  "out  and  enforcing  its  provisions,  and  may  require  any  em- 
ploye claiming  to  have  sustained  injury  to  submit  himself  for  examina- 
tion before  such  board  or  someone  acting  under  its  authority  at  some 
reasonable  time  and  place  within  the  State,  and  as  often  as  may  be  rea- 
sonably ordered  by  the  board  to  a  physician  or  physicians  authorized 
to  practice  under  the  laws  of  this  State.     If  the  employe  or  the  asso- 
ciation requests,  he  or  it  shall  be  entitled  to  have  a  physician  or  physi- 
cians of  his  or  its  own  selection  present  to  participate  in  such  examina- 
tion.    Refusal  of  the  employe  to  submit  to  such  examination  shall  de- 
prive him  of  his  right  to  compensation  during  the  continuance  of  such 
refusal.     When  a  right  to  compensation  is  thus  suspended  no  compen- 
sation shall  be  payable  in  respect  to  the  period  of  suspension.     If  any 
employe  shall  persist  in  unsanitary  or  injurious  practices  which  tend 
to  either  imperil  or  retard  his  recovery,  or  shall  refuse  to  submit  to 
such  medical  or  surgical  treatment  as  is  reasonably  essential  to  promote 
his  recovery,  the  board  may  in  its  discretion  order  or  direct  the  asso- 
ciation to  reduce  or  suspend  the  compensation  of  any  such  injured  em- 
ploye.    No  compensation  shall  be  reduced  or  suspended  under  the  terms 
of  this  section  without  reasonable  notice  to  the.  employe  and  an  oppor- 
tunity to  be  heard. 

The  association  shall  Jiave  the  privilege  of  having  any  injured  em- 
ploye examined  by  a  physician  or  physicians  of  its  own  selection,  at 


126  INSURANCE  LAWS  OF  TEXAS. 

reasonable  times,  at  a  place  or  places  suitable  to  the  condition  of  the 
injured  employe  and  convenient  and  accessible  to  him;  provided,  how- 
ever, that  the  association  shall  pay  for  such  examination  and  the  rea- 
sonable expense  incident  to  the  injured  employe  in  submitting  thereto; 
and  provided  further,  that  the  injured  employe  shall  have  the  privi- 
lege to  have  a  physician  or  physicians  of  his  own  selection,  at  the  ex- 
pense of  such  injured  employe,  present  to  participate  in  such  examina- 
tion. 

Process  and  procedure  shall  be  as  summary  as  may  be  under  this  act. 
The  board  or  any  member  thereof  shall  have  power  to  subpoena  wit- 
nesses, administer  oaths,  inquire  into  matters  of  fact,  and  to  examine 
parts  of  the  books  and  records  of  the  parties  to  a  proceeding  as  relate  to 
questions  in  dispute.  All  rulings  and  decisions  of  the  board  relating 
to  disputed  claims  shall  be  upon  questions  of  fact  and  in  accord  with 
the  provisions  of  this  act.  (Acts  35th  Leg.,  Chap.  103,  Sec.  47  Part  II.) 

Notice  to  Association  and  Subscriber  Concerning  Claim  Required. 

339.  Unless  the  association  or  subscriber  have  notice  of  the  injury, 
no  proceeding  for  compensation  for  injury  under  this  act  shall  be  main- 
tained unless  a  notice  of  the  injury  shall  have  been  given  to  the  asso- 
ciation or  subscriber  within  thirty  (30)  days  after  the  happening  thereof, 
and  unless  a  claim  for  compensation  with  respect  to  such  injury  shall 
have  been  made  within  six  (6)   months  after  the  occurrence  of  same; 
or,  in  case  of  death  of  the  employe  or  in  the  event  of  his  physical  or 
mental  incapacity  within  six   (6)    months  after  the  death  or  the  re- 
moval of  such  physical  or  mental  incapacity.     Provided,  that  for  good 
cause  the  board  may  in  meritorious  cases  waive  the  strict  compliance 
with  the  foregoing  limitations  as  to  notice  and  the  filing  of  the  claim 
before  the  board.     (Acts  35th  Leg.,  Chap.  103,  Sec.  4a,  Part  II.) 

Appeal  to  the  Court  Against  Decision  of  the  Board  Affecting  the  Interest 
of  Parties. 

340.  All  questions  arising  under  this  act,  if  not  settled  by  agree- 
ment of  the  parties  interested  therein  and  within  the  terms  and  provi- 
sions of  this  act,  shall,  except  as  otherwise  provided,  be  determined  by 
the  board.     Any  interested  party  who  is  not  willing  and  does  not  con- 
sent to  abide  by  the  final  ruling  and  decision  of  said  board  shall  within 
twenty  days  after  the  rendition  of  said  final  ruling  and  decision  by  said 
board  give  notice  to  the  adverse  party  and  to  the  board  that  he  will 
not  abide  by  said  final  ruling  and  decision.     And  he  shall  within  twenty 
days  after  giving  such  notice  bring  suit  in  some  court  of  competent 
jurisdiction  in  the  county  where  the  injury  occurred  to  set  aside  said 
final  ruling  and  decision,  and  said  board  shall  proceed  no  further  toward 
the   adjustment   of    such   claim,   other   than   as   hereinafter   provided; 
provided,  however,  that  whenever  such  suit  is  brought,  the  rights  and 
liability  of  the  parties  thereto  shall  be  determined  by  the  provisions 
of  this  act,  and  the  suit  of  the  injured  employe  or  person  suing  on 
account  of  the  death  of  such  employe  shall  be  against  the  association 
if  the  employer  of  such  injured  or  deceased  employe  at  the  time  of 
such  injury  or  death  was  a  subscriber  as  defined  in  this  act.     If  the 
final  order  of  the  board  is  against  the  association,  then  the  association 
and  not  the  employer  shall  bring  suit  to  set  aside  said  final  ruling  and 


INSURANCE  LAWS  OF  TEXAS.  127 

decision  of  the  board,  if  it  so  desires,  and  the  court  shall  in  either  event 
determine  the  issues  in  such  cause  instead  of  the  board  upon  trial  de 
novo,  and  the  burden  of  proof  shall  be  upon  the  party  claiming  com- 
pensation. In  case  of  recovery  the  same  shall  not  exceed  the  maxi- 
mum compensation  allowed  under  the  provisions  of  this  act.  If  any 
party  to  any  such  final  ruling  and  decision  of  the  board,  after  having 
given  the  notice  as  above  provided,  fails  within  said  twenty  days  to 
institute  and  prosecute  a  suit  to  set  the  same  aside,  then  said  final  rul- 
ing and  decision  shall  be  binding  upon  all  parties  thereto,  and,  if  the 
same  is  against  the  association,  it  shall  at  once  comply  with  such  final 
ruling  and  decision,  and  failing  to  do  so  the  board  shall  certify  that 
fact  to  the  Commissioner  of  Insurance  and  Banking,  and  such  certifi- 
cate shall  be  sufficient  cause  to  justify  said  Commissioner  of  Insurance 
and  Banking  to  revoke  or  forfeit  the  license  or  permit  of  such  asso- 
ciation to  do  business  in  Texas.  (Acts  35th  Leg.,  Chap.  103,  Sec.  5, 
Part  II.) 

Claimant  Entitled  to  Damages  and  Attorney's  Fee  Where  the  Association 
Refuses  to  Obey  Order  of  Board. 

341.  In  all  cases  where  the  board  shall  make  a  final  order,  ruling 
or  decision,  as  provided  in  the  foregoing  Section  5  (Sec.  340)  hereof, 
and  against  the  association,  and  the  association  shall  fail  or  refuse  to 
obey  or  comply  with  the  same  and  shall  fail  or  refuse  to  bring  suit  to 
set  the  same  aside  as  in  said  Section  5  (Sec.  340)  is  provided,  then  in 
that  event  the  claimant  in  addition  to  the  rights  and  remedies  given 
him  and  the  board  in  said  Section  5  (Sec.  340)  may  bring  suit  in  some 
court  of  competent  jurisdiction  where  the  injury  occurred,  upon  said 
order,  ruling  or  decision,  and  if  he  secures  a  judgment  in  said  court 
sustaining  such  order,  ruling  or  decision  in  whole  or  in  part,  he  shall 
also  be  entitled  to  recover  the  further  sum  of  12  per  cent  as  dam- 
ages upon  the  amount  of  compensation  so  recovered  in  said  judgment, 
together  with  a  reasonable  attorney's  fee  for  the  prosecution  and  col- 
lection of  such  claim. 

It  is  further  provided  that  where  the  board  has  made  an  award 
against  an  association  requiring  the  payment  to  an  injured  employe  or 
his  beneficiaries  of  any  weekly  or  monthly  payments,  under  the  terms 
of  this  act,  and  such  association  should  thereafter  fail  or  refuse,  with- 
out justifiable  cause,  to  continue  to  make  said  payments  promptly  as 
they  mature,  then  the  said  injured  employe  or  his  beneficiaries,  in  case 
of  his  death,  shall  have  the  right  to  mature  the  entire  claim  and  to 
institute  suit  thereon  in  any  court  of  competent  jurisdiction  where  the 
injury  occurred  to  collect  the  full  amount  thereof,  together  with  12 
per  cent  penalties  and  attorney's  fees,  as  provided  for  in  the  foregoing 
paragraph  of  this  section.  Suit  may  be  brought  under  the  provisions 
of  this  section  of  the  act,  either  in  the  county  where  the  accident  oc- 
curred, or  in  any  county  where  the  claimants  reside,  or  where  one  or 
more  of  such  claimants  may  have  his  place  of  residence  at  the  time 
of  the  institution  of  the  suit.  (Acts  35th  Leg.,  Chap.  103,  Sec.  5a, 
Part  II.) 


128  INSURANCE  LAWS  OP  TEXAS. 

Employe  of  Sub-Contractor  May  Have  Independent  Bight  of  Action 
Against  Such  Sub-Contractor. 

342.  If  any  subscriber  to  this  act  with  the  purpose  and  intention 
of  avoiding  any  liability  imposed  by  the  terms  of  the  act  sublets  the 
whole  or  any  part  of  the  work  to  be  performed  or  done  by  said  sub- 
scriber to  any  subcontractor,  then  in  the  event  any  employe  of  such 
subcontractor  sustains  an  injury  in  the  course  of  his  employment  he 
shall  be  deemed  to  be  and  taken  for  all  purposes  of  this  act  to  be  the 
employe  of  the  subscriber,  and  in  addition  thereto  such  employe  shall 
have  an  independent  right  of  action  against  such  subcontractor,  which 
shall  in  no  way  be  affected  by  any  compensation  to  be  received  by  him 
under  the  terms  and  provisions  of  this  act.     (Acts  35th  Leg.,  Chap. 
103,  Sec.  6,  Part  II.) 

Proceedings  Authorized  Where  Injury  Was  Caused  by  Which  Some  Person 
Other  Than  the  Subscriber  Is  Liable. 

343.  Where  the  injury  for  which  compensation  is  payable  under  this 
act  was  caused  under  circumstances  creating  a  legal  liability  in  some 
person  other  than  the  subscriber  to  pay  damages  in  respect  thereof,  the 
employe  may  at  his  option  proceed  either  at  law  against  that  person  to 
recover  damages  or  against  the  association  for  compensation  under  this 
act,  but  not  against  both,  and  if  he  elects  to  proceed  at  law  against 
the  person  other  than  the  subscriber,  then  he  shall  not  be  entitled  to 
compensation   under  the   provisions   of  this   act;   if   compensation   be 
claimed  under  this  act  by  the  injured  employe  or  his  legal  benefi- 
ciaries, then  the  association  shall  be  subrogated  to  the  rights  of  the 
injured  employe  in  so  far  as  may  be  necessary  and  may  enforce  in  the 
name  of  the  injured  employe  or  of  his  legal  beneficiaries  or  in  its  own 
name  and  for  the  joint  use  and  benefit  of  said  employe  or  beneficiaries 
and  the  association  and  the  liability  of  said  other  person,  and  in  case 
the  association  recovers  a  sum  greater  than  that  paid  or  assumed  by 
the  association  to  the  employe  or  his  legal  beneficiaries,  together  with 
a  reasonable  cost  of  enforcing  such  liability,  which  shall  be  determined 
by  the  court  trying  the  case,  then  out  of  the  sum  so  recovered  the  asso- 
ciation shall  reimburse  itself  and  pay  said  cost,  and  the  excess  so  re- 
covered shall  be  paid  to  the  injured  employe  or  his  beneficiaries.    The  as- 
sociation shall  not  have  the  right  to  adjust  or  compromise  such  lia- 
bility against  such  third  person  without  notice  to  the  injured  employe 
or  his  beneficiaries.     The  association  shall  not  have  the  right  to  adjust 
or  compromise  such  liability  against  such  third  person  without  notice 
to  the  injured  employe  or  his  beneficiaries  and  the  approval  of  the 
board,  upon  a  hearing  thereof.     (Acts  35th  Leg.,  Chap.  103,  Sec.  6a, 
Part  II.) 

Keeping  Records  of  Injuries  to  Workmen  by  Employers — Their  Duty  to 
Report  Accident  to  the  Board  Within  Eight  Days  on  Official  Blanks—- 
What Report  Shall  State — Supplemental  Report  Upon  the  Termina- 
tion of  Disability  or  Disability  Extends  Beyond  Sixty  Days— Penalty 
for  Failing  or  Refusing  Any  Such  Report. 

344.  Every  subscriber  shall  hereafter  keep  a  record  of  all  injuries, 
fatal  or  otherwise,  sustained  by  his  employes  in  the  course  of  their  em- 
ployment.    Within  eight  days  after  the  occurrence  of  an  accident  re- 


INSURANCE  LAWS  OF  TEXAS.  129 

suiting  in  an  injury  to  an  employe,  causing  his  absence  from  work  for 
more  than  one  day,  a  report  thereof  shall  be  made  in  writing  to  the 
board  on  blanks  to  be  procured  from  the  board  for  that  purpose.  Upon 
the  termination  of  the  incapacity  of  the  injured  employe,  or  if  such  in- 
capacity extends  beyond  a  period  of  sixty  days,  the  subscriber  shall  make 
a  supplemental  report  upon  blanks  to  be  procured  for  that  purpose. 
The  said  report  shall  contain  the  name  and  nature  of  the  business  of 
the  employer,  the  location  of  the  establishment,  the  name,  age,  sex,  and 
occupation  of  the  injured  employe  and  the  character  of  work  in  which 
he  was  engaged  at  the  time  of  the  injury,  and  shall  state  the  date  and 
hour  of  receiving  such  injury  and  the  nature  and  cause  of  the  injury, 
and  such  other  information  as  the  board  may  require.  Any  employer 
wilfully  failing  or  refusing  to  make  any  such  report  within  the  time 
herein  provided,  or  wilfully  failing  or  refusing  to  give  said  board  any 
information  demanded  by  said  board  relating  to  any  injury  to  any  em- 
ploye, which  information  is  in  the  possession  of  or  can  be  ascertained 
by  the  employer  by  the  use  of  reasonable  diligence,  shall  be  liable  for 
and  shall  pay  to  the  State  of  Texas  a  penalty  of  not  more  than  one 
thousand  dollars  for  each  and  every  offense,  the  same  to  be  recovered 
in  a  suit  to  be  instituted  and  prosecuted  in  Travis  county  by  the  At- 
torney General  or  by  the  district  or  county  attorney  under  his  direc- 
tion in  a  district  court  thereof.  (Acts  35th  Leg.,  Chap.  103,  Sec.  7, 
Part  II.) 

Note. — Section  7  of  part  II  of  the  Liability  and  Workmen's  Compensation 
Act  of  1913  requiring  employers  to  report  accidents,  applies  only  to  such  em- 
ployers as  accept  the  provisions  and  benefits  of  the  said  act  and  does  not  apply 
to  employers  not  insured  thereunder.  (Opinion  of  Attorney  General,  Septem- 
ber 6,  1913.) 

Quorum  of  Board — Seal  of  Board. 

345.  A  majority  of  the  board  shall  constitute  a  quorum  to  transact 
business,  and  the  act  or  decision  of  any  two  members  of  the  board  shall 
be  held  the  act  or  decision  of  the  board,  except  as  otherwise  herein 
specifically  provided.     No   vacancy  shall  impair  the  right  of  the  re- 
maining member  or  members  of  the  board  to  exercise  all  the  powers  of 
the  board.     The  board  shall  provide  itself  with  a  seal  for  the  authen- 
tication of  its  orders,  awards  or  proceedings  on  which  shall  be  inscribed 
the  words  "Industrial  Accident  Board,  State  of  Texas,  Official  Seal." 
And  any  order,  award  or  proceeding  of  said  board  when  duly  attested 
and  sealed  by  the  board  or  its  secretary  shall  be  admissible  as  evidence 
of  the  act  of  said  board  in  any  court  in  this  State.     (Acts  35th  Leg., 
Chap.  103,  Sec.  8,  Part  II.) 

Board  Shall  Furnish  Certified  Copies  of  Records — Fees. 

346.  Upon  the  written  request  and  payment  of  the  fees  therefor, 
which  fees  shall  be  the  same  as  those  charged  for  similar  services  in  the 
Secretary  of  State's  office,  the  board  shall  furnish  to  any  person  entitled 
thereto  a  certified  copy  of  any  order,  award,  decision  or  paper  on  file  in 
the  office  of  said  board,  and  the  fees  so  received  for  such  copies  shall 
be  covered  into  the  Treasury  of  the  State  of  Texas  into  the  fund  for 
assistant  clerical  hire  in  the   department   of   the   Industrial   Accident 
Board,  and  so  much  thereof  as  may  be  necessary  may  be  used  by  said 


130  INSURANCE  LAWS  OF  TEXAS. 

department  upon  proper  voucher  therefor  to  pay  the  necessary  clerks 
to  make  such  copies,  and  any  excess  that  may  exist  at  the  end  of  any 
fiscal  year  in  such  fund  shall  lapse  into  the  general  revenue  fund  of 
this  State,  and  no  fee  or  salary  shall  be  paid  to  any  clerk  or  other  per- 
son in  said  department  for  making  such  copies  in  excess  of  the  fees 
charged  for  such  copies.  (Acts  35th  Leg.,  Chap.  103,  Sec.  9,  Part  II.) 

Board  May  Make  Investigations  Anywhere  in  the  State. 

347.  Said  board  or  any  member  thereof  may  hold  hearings  or  take 
testimony  or  make  investigations  at  any  point  within  the  State  of  Texas, 
reporting  the  result  thereof,  if  the  same  is  made  by  one  member  to  the 
board,  or  it  can  employ  or  use  the  assistance  of  an  inspector  or  adjuster 
for  the  purpose  of  adjusting  and  settling  claims  for  compensation  or 
developing  the  facts  relating  to  any  claim  for  compensation.      (Acts 
35th  Leg.,  Chap.  103,  Sec.  10,  Part  II.) 

Association  Shall  Notify  Board  Whenever  It  Stops  or  Suspends  Payment 
of  Compensation. 

348.  When  the  association  suspends  or  stops  payment  of  compen- 
sation, it  shall  immediately  notify  the  board  of  that  fact,  giving  to  said 
board  the  name,  number  and  style  of  the  claim,  the  amount  paid  thereon, 
the  date  of  the  suspension  or  stopping  of  payment  thereon   and  the 
reason  for  such  suspension  or  stopping  of  payment  of  compensation. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  11,  Part  II.) 

Board  May  Authorize  Monthly  or  Quarterly  Payments  of  Compensation 
or  Compromise  Settlements. 

349.  The  board  upon  application  of  either  party  may  in  its  discre- 
tion, having  regard  to  the  welfare  of  the  employe  and  the  convenience 
of   the   association,    authorize   compensation   to   be    paid   monthly    or 
quarterly. 

In  any  case  where  the  liability  of  the  association  or. the  extent  of 
the  injury  of  the  employe  is  uncertain,  indefinite  or  incapable  of  being 
satisfactorily  established  the  board  may  approve  any  compromise  ad- 
justment, settlement  or  commutation  thereof  made  between  the  parties. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  12,  Part  II.) 

PART  III. 

Creation  of  Employers'  Insurance  Association. 

350.  The  "Texas  Employers'  Insurance  Association"  is  hereby  cre- 
ated, a  body  corporate  with  the  powers  provided  in  this  act  and  with 
all  the  general  corporate  powers   incident  thereto.     (Acts   35th   Leg., 
Chap.  103,  Sec.  1,  Part  III.) 

Appointment  of  Constitutive  Board  of  Directors  and  Its  Term — Election 
of  Their  Successors  According  to  the  Provisions  of  the  By-Laws. 

351.  The  Governor  shall  appoint  a  board  of  directors  of  the  asso- 
ciation consisting  of  twelve  members,  who  shall  serve  for  a  term  of  one 
year  or  until  their  successors  are  elected  by  ballot  by  the  subscribers 
at  such  time  and  for  such  term  as  the  by-laws  shall  provide;  provided, 
that  at  any  annual  meeting  of  subscribers  the  number  of  directors  may 


INSURANCE  LAWS  OF  TEXAS.  131 

be  increased  or  decreased  by  resolution  duly  recorded  in  the  minutes 
of  such  meeting.    (Acts  35th  Leg.,  Chap.  103,  Sec.  2,  Part  III.) 

Powers  and  Duties  of  the  Board  of  Directors. 

352.  Until  the  first  meeting  of  the  subscribers  the  board  of  directors 
shall  have  and  exercise  all  the  powers  of  the  subscribers  and  may  adopt 
by-laws,  not  inconsistent  with  the  provisions  of  this  act,  which  shall  be 
in  effect  until  amended  or  repealed  by  the  subscribers.     (Acts  35th  Leg., 
Chap.  103,  Sec.  3,  Part  III.) 

Organization  of  the  Board  of  Directors. 

353.  The  board  of  directors  shall  immediately  choose  by  ballot  a 
president,  who  shall  be  a  member  of  the  board,  a  secretary,  a  treasurer, 
and  such  other  officials  as  the  by-laws  may  provide.     (Acts  35th  Leg., 
Chap.  103,  Sec.  4,  Part  III.) 

What  Shall  Constitute  a  Quorum — Vacancies,  How  Filled. 

354.  Seven  or  more  of  the  directors  shall  constitute  a  quorum  for 
the  transaction  of  business.     Vacancies  in  any  office  may  be  filled  in 
such  manner  as  the  by-laws  shall  provide.     (Acts  35th  Leg.,  Chap.  103, 
Sec.  5,  Part  III.) 

Board  of  Directors  May  Appoint  an  Executive  Committee. 

355.  The  board  of  directors  may  appoint  an  executive  committee, 
which  may  have  and  exercise  all  of  the  powers  of  the  board  of  directors 
except  when  the  board  is  in  session.     (Acts  35th  Leg.,  Chap.  103,  Sec. 
5a,  Part  III.) 

Who  May  Become  a  Subscriber. 

356.  Any  employer  of  labor  in  this  State  may  become  a  subscriber, 
except  as  provided  in  Section  2,  Part  I  (Sec.  298)  of  this  act.     (Acts 
35th  Leg.,  Chap.  103,  Sec.  6,  Part  III.) 

Note. — A  municipal  corporation  cannot  become  a  subscriber.  The  word  "cor- 
poration" is  a  technical  word  which,  however,  has  a  common  meaning  which 
is  "private  corporation,"  and  as  there  is  nothing  in  this  Act  to  indicate  the 
contrary  the  common  meaning  of  the  word  is  given  to  it.  (Opinion  of  At- 
torney General,  September  23,  1913.) 

The  First  Meeting  of  the  Board  of  Directors,  When  Called. 

357.  The  board  of  directors  shall,  within  thirty  days  of  the  sub- 
scription of  twenty-five  employers,  call  the  first  meeting  of  the  sub- 
scribers by  a  notice  in  writing  mailed  to  each  subscriber  at  his  resi- 
dence or  place  of  business,  not  less  than  ten  days  before  the  date  fixed 
for  the  meeting.     (Acts  35th  Leg.,  Chap.  103,  Sec.  7,  Part  III.) 

The  Voting  Power  of  the  Subscribers. 

358.  In  any  meeting  of  the  subscribers  each  subscriber  shall  have 
one  vote,  and  if  a  subscriber  has  500  employes  to  whom  the  association 
is  bound  to  pay  compensation  he  shall  be  entitled  to  two  votes,  and  he 
shall  be  entitled  to  one  additional  vote  for  each  additional   500  em- 
ployes to  whom  the  association  is  bound  to  pay  compensation,  but  no 


132  INSURANCE  LAWS  or  TEXAS. 

subscriber  shall  cast,  by  his  own  right  or  by  right  of  proxy,  more  than 
20  votes.     (Acts  35th  Leg.,  Chap.  163,  Sec.  8,  Part  III.) 

No  Policies  Shall  Be  Issued  by  Association  Unless  It  Has  Fifty  Mem- 
bers with  2000  Employes. 

359.  No  policies  shall  be  issued  by  the  association  until  not  less  than 
50  members  have  subscribed,  who  have  not  less  than  2000  employes 
to  whom  the  association  may  be  bound  to  pay  compensation.     (Acts  35th 
Leg.,  Chap.  103,  Sec.  9,  Part  III.) 

No  Policy  Shall  Be  Issued  Before  Thirty  Days  After  Granting  a  License 
to  the  Association  by  the  Commissioner  of  Insurance  and  Banking. 

360.  No  policies  shall  be  issued  by  the  association  until  a  list  of 
the  subscribers  with  the  number  of  employes  of  each,  together  with 
such  information  as  the  Commissioner  of  Insurance  and  Banking  may 
require,  shall  have  been  filed  with  the  Department  of  Insurance  and 
Banking,  nor  until  the  president  and  secretary  of  the  association  shall 
have  certified  under  oath  that  every  subscription  on  the  list  so  filed  is 
genuine  and  made  with  an  agreement  with  each  subscriber  that  he  will 
take  the  policy  so  subscribed  for  by  him  within  thirty  days  of  the 
granting  of  a  license  to  the  association  by  the  Commissioner  of  Insur- 
ance and  Banking  to  issue  policies.     (Acts  35th  Leg.,  Chap.  103,  Sec. 
10,  Part  III.) 

Note. — Above  section  and  Section  17  of  part  III,  requiring  the  filing  with  the 
Commissioner  of  Insurance  and  Banking  of  lists  of  subscribers,  with  number  of 
employes  of  each,  and  any  proposed  premium,  assessment,  dividend  or  distribu- 
tion of  subscribers,  do  not  apply  to  capital  stock  insurance  companies,  but  do 
apply  to  mutual  companies  and  reciprocal  associations.  (Opinion  of  Attorney 
General,  September  12,  1913.) 

No  Further  Policies  Shall  Be  Issued  Until  Shortage  of  Number  of  Sub- 
scribers or  Employes  Is  Covered. 

361.  If  the  number  of  subscribers  falls  below  50,  or  the  number  of 
employes  to  whom  the  association  may- be  bound  to  pay  compensation 
falls  below  2000,  no  further  policies  shall  be  issued  until  other  em- 
ployers have  subscribed  who,  together  with  existing  subscribers,  amount 
to  not  less  than  50,  who  have  not  less  than  2000  employes  to  whom  the 
association  may  be  bound  to  pay  compensation,  said  subscriptions  to 
be  subject  to  the  provisions  of  the  preceding  section.     (Acts  35th  Leg., 
Chap.  103,  Sec.  11,  Part  III.) 

Commissioner  of  Insurance  and  Banking  Shall   Grant  a  License,   When. 

362.  Upon  the  filing  of  the  certificates  provided  for  in  the  two  pre- 
ceding sections,  the  Commissioner  of  Insurance  and  Banking  shall  make 
such  investigations  as  he  may  deem  proper  and,  if  his  findings  war- 
rant it,  grant  a  license  to  the  association  to  issue  policies.     (Acts  35th 
Leg.,  Chap.  103,  Sec.  12,  Part  III.) 

Classification  of  Subscribers  Into  Groups  by  the  Board  of  Directors. 

363.  .  The   board   of   directors   may   distribute   the   subscribers   into 
groups  for  the  purpose  of  segregating  the  experience  of  each  such  group 
as  to  premiums  and  losses,  and  for  the  purpose  of  determining  divi- 


INSURANCE  LAWS  OF  TEXAS.  133 

dends  payable  to  and  assessments  payable  by  the  subscribers  within 
each  group,  but  for  the  purpose  of  determining  the  solvency  of  the 
association  the  funds  of  the  association  shajl  be  deemed  one  and  indi- 
visible. The  board  of  directors  shall  have  power  to  rearrange  any  of 
the  groups  by  withdrawing  any  subscriber  and  transferring  him  wholly 
or  in  part  to  any  group  and  to  set  up  new  groups  at  its  discretion.  (Acts 
35th  Leg.,  Chap.  103,  Sec.  13,  Part  III.) 

Mutual  Contingent  Liability  of  a  Subscriber  Fixed  in  Assocation's  By- 
Laws  and  Policies, 

364.  The  association  may,  in  its  by-laws  and  policies,  fix  the  limit 
of  liability  of  the  subscribers  for  the  payment  of  assessments  herein- 
after provided  for,  but  such  limit  of  liability  of  the  subscribers  shall 
not,  except  by  special  agreement  in  writing  between  the  association  and 
subscriber,  be  fixed  at  an  amount  greater  than  an  amount  equal  to  and 
in  addition  to  an  annual  premium.     (Acts  35th  Leg.,  Chap.  103    Sec. 
14,  Part  III.) 

Association  May  Collect  Additional  Assessments — How  Levied  and  Col- 
lected. 

365.  If  the  association,  at  the  end  of  any  calendar  year,  is  not  pos- 
sessed of  admitted  assets  in  excess  of  unearned  premiums  sufficient  for 
the  payment  of  its  incurred  losses  and  expenses,  it  shall  make  an  as- 
sessment for  the  amount  needed  to  pay  such  losses  and  expenses,  first 
upon  the  subscribers  within  each  group  whose  earned  premiums  com- 
pared with  its  incurred  losses  and  expenses  shows  a  deficiency  for  the 
group,  and,  second,  only  upon  the  subscribers  within  each  group  whose 
earned  premiums  compared  with  its  incurred  losses  and  expenses  shows 
a  surplus,  and  in  no  event  shall  it  make  an  assessment  for  any  aggre- 
gate amount  more  than  is  needed  to  pay  losses  and  expenses.     Every 
subscriber  shall,  in  accordance  with  the  law  and  his  contract,  pay  his 
proportionate  part  of  any  assessment  which  may  be  levied  by  the  asso- 
ciation on  account  of  losses  and  expenses  incurred  during  any  calendar 
vear  while  he  is  a  subscriber.      (Acts  35th  Leg.,  Chap.  103,  Sec.  15, 
Part  III.) 

Payments  of  Dividends  Upon  the  Policies  Expiring  During  Each  Year — 
Classification  by  Groups,  But  Whole  Fund  Shall  Be  Used  for  Pay- 
ment of  Approved  Compensation. 

366.  The  board  of  directors  may  by  vote  from  time  to  time  fix  the 
amount  to  be  paid  as  dividends  on  the  policies  in  force  during  each 
calendar  year  after  retaining  sums  sufficient  to  pay  all  compensation 
which  may  be  payable  on  account  of  injuries  sustained  and  expenses  in- 
curred during  the  calendar  year.     Dividends  and  assessments  shall  be 
fixed  by  and  for  groups,  but  the  entire  assets  of  the  association,  includ- 
ing the  liability  of  the  subscriber  to  assessment  within  the  limits  fixed 
by  the  by-laws  or  by  special  agreement  in  writing  as  authorized,  shall 
be  subject  to  the  payment  of   any   approved   claim  for  compensation 
against  the  association.     (Acts  35th  Leg.,  Chap.  103,  Sec.  16,  Part  III.) 

Note. — So  long  as  the  association  or  company  maintains  a  surplus  of  $200,000, 
the  law  does  not  prohibit  the  payment  of  dividends  monthly,  if  the  earned 
fund  exists  from  which  they  may  be  paid.  If  the  rates  are  higher  than  the 
lowest  possible  rate  consistent  with  the  maintenance  of  solvency  and  the 


134  INSURANCE  LAWS  OF  TEXAS. 

•creation  of  adequate  reserves  and  a  reasonable  surplus,  and  are  in  fact  so 
Mgh  as  to  require  a  monthly  payment  of  dividends,  the  remedy  is  reduction  of 
the  rates.  If  too  high,  they  may  be  enjoined  by  any  interested  party.  (Opin- 
ion of  Attorney  General,  December  22,  1917.) 

Liability  of  Members  to  Assessment  Suspended,  When. 

367.  Whenever  the  association  shall  have  accumulated  at  the  end 
•of  any  calendar  year  an  admitted  surplus  in  excess  of  incurred  losses, 
expenses  and  unearned  premiums  amounting  to  the  sum  of  two  hun- 
dred thousand  dollars,  the  liability  of  its  members  to  assessment  shall 
be  suspended  during  the  ensuing  calendar  year,  or  for  such  further 
period  as  the  association  shall  maintain  unimpaired  such  surplus  of 
two  hundred  thousand  dollars  or  more,  and  the  certificate  of  the  Com- 
missioner of  Insurance  and  Banking,  after  an  examination  and  report, 
shall  be  conclusive  evidence  as  to  the  facts  in  any  proceeding  in  which 
the  fact  may   be  an   issue.     (Acts   35th  Leg.,   Chap.    103,   Sec.    16a, 
Part  III.) 

Association  May  Issue  Policies  Whose  Holders  Will  Not  Participate  in 
Surplus,  When. 

368.  Whenever  by  reason  of  having  qualified  under   Section   16a, 
Part  III  (Sec.  367),  to  issue  policies  which  are  not  subject  to  assess- 
ment, the  association  may  issue  policies  which  will  not  entitle  the  holder 
to  participate  in  any  distribution  of  surplus.     (Acts  35th  Leg.,  Chap. 
103,  Sec.  16b,  Part  III.) 

Board  of  Directors  Shall  Determine  Hazards  by  Classes  and  Fix  Bates. 

369.  The  board  of  directors  shall  determine  hazards  by  classes,  and 
iix  the  rates  of  premium  which  shall  be  applicable  to  the  payroll  in  each 
of  such  classes  at  the  lowest  possible  rate  consistent  with  the  mainte- 
nance of  solvency  and  the  creation  of  adequate  reserves  and  a  reason- 
able surplus,  and  for  such  purpose  may  adopt  a  system  of  schedule  and 
experience  rating  in  such  a  manner  as  to  take  account  of  the  peculiar 
hazard  of  each  individual  risk.     (Acts  35th  Leg.,  Chap.  103,  Sec.  16c, 
Part  ill.) 

Approval  by  the  Commissioner  of  Insurance  and  Banking  Necessary  for 
Fixing  Premiums,  Assessments,  Etc. 

370.  Any  proposed  rate  of  premium,  assessment  or  dividend  or  any 
distribution  of  subscribers  shall  not  take  effect  until  approved  by  the 
Commissioner  of  Insurance  and  Banking  after  such  investigation  as  he 
may  deem  necessary.     (Acts  35th  Leg.,  Chap.  103,  Sec.  17,  Part  III.) 

Note. — See   Section    10,   part   III.      (Opinion  of   Attorney   General,    September 
12,   1913.) 

Regulation  and  Rules  for  the  Conditions  in  Plants  and  Places  of  Works 
With  Respect  to  the  Safety  of  Its  Employes — Appeal  to  the  Indus- 
trial Accident  Board. 

371.  The  association  shall  make  and  enforce  reasonable   rules  for 
the  prevention  of  injuries  on  the  premises  of  subscribers,  and  for  this 
purpose  the  inspector  of  the  association  or  of  the  board  shall  have  free 
access  to  all  such  premises  during  regular  working  hours.     Any  sub- 
scriber aggrieved  by  such  rule  or  regulation  may  petition   the   board 


INSURANCE  LAWS  OF  TEXAS.  135 

for  a  review,  and  it  may  affirm,  amend  or  annul  the  rule  or  regulation. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  18,  Part  III.) 

Any  Employer  Upon  Becoming  a  Subscriber  Must  Report  to  Industrial 
Accident  Board. 

372.  Whenever  any  employer  of  labor  in  this  State  becomes  a  sub- 
scriber to  this  act,  he  shall  immediately  notify  the  board  of  such  fact, 
stating  in  such  notice  his  name,  place  of  business,  character  of  the 
business,  approximate  number  of  employes,  estimated  amount  of  his 
payroll  and  the  name  of  the  insurance  company  carrying  his  insurance, 
the  date  of  issuing  the  policy  and  the  date  when  the  same  will  expire, 
and  whenever  any  policy  is  renewed  that  fact  shall  be  made  known  to 
the  board,  and  the  notice  thereof  shall  contain  the  above  facts.     The 
association  shall  also  report  the  same  to  the  board,  giving  the  name  of 
the  employer,  place  of  business,  character  of  the  business,  .approximate 
number  of  employes,  estimated  amount  of  payroll,  date  of  issuance  and 
date  of  expiration  of  said  policy.     Any  employer  or  association  wilfully 
failing  or  refusing  to  make  any  such  report  shall  be  liable  for  and  shall 
pay  to  the  State  of  Texas  a  penalty  of  not  more  than  one  thousand  dol- 
lars ($1000)  for  each  and  every  offense,  the  same  to  be  recovered  in  a 
suit  to  be  instituted  and  prosecuted  in  Travis  county  by  the  Attorney 
General  or  by  the  district  or  county  attorney  under  his  direction  in 
the  district  court  thereof.     (Acts  35th  Leg.,  Chap.  103,  Sec.  18a,  Part 
III.) 

Subscriber  Must  Notify  His  Employes  When  He  Provides  for  Paying 
Compensation. 

373.  Every  subscriber  shall  as  soon  as  he  secures  a  policy  give  notice 
in  writing  or  print,  or  in  such  manner  or  way  as  may  be  directed  or 
approved  by  the  board  of  all  persons  under  contract  of  hire  with  him 
that  he  has  provided  for  payment  of  compensation  for  injuries  with  the 
association.     (Acts  35th  Leg.,  Chap.  103,  Sec.  19,  Part  III.) 

Notice  as  Directed  by  Industrial  Accident  Board  Must  Be  Given  by  Sub- 
scriber When  He  Provides  for  Compensation  and  When  He  Ceases  to 
Be  a  Subscriber. 

374.  Every  subscriber  shall,  after  receiving  a  policy,  give  notice  in 
writing  or  print,  or  in  such  manner  or  way  as  may  be  directed  or  ap- 
proved by  the  board,  to  all  persons  with  whom  he  is  about  to  enter  into 
a  contract  of  hire  that  he  has  provided  for  payment  of  compensation 
for  injuries  by  the  association.     If  any  employer  ceases  to  be  a  sub- 
scriber, he  shall,  on  or  before  the  date  on  which  his  policy  expires,  give 
notice  to  that  effect  in  writing  or  print,  or  in  such  other  manner  or 
way  as  the  board  may  direct  or  approve  to  all  persons  under  contract 
of  hire  with  him.     In  case  of  the  renewal  of  his  policy  no  notice  shall 
be  required  under  this  act.     He  shall  file  a  copy  of  said  notice  with 
the  board.     (Acts  35th  Leg.,  Chap.  103,  Sec.  20,  Part  III.) 

Association  Is  Responsible  for  Liability  Judgment. 

375.  If  a  subscriber  who  has  complied  with  all  the  rules,  regula- 
tions and  demands  of  the  association  is  required  by  any  judgment  of 
a  court  at  law  to  pay  any  employe  any  damages,  actual  or  exemplary, 


136  INSURANCE  LAWS  OF  TEXAS. 

on  account  of  any  personal  injury  sustained  by  such  employe  in  the 
course  of  his  employment  during  the  period  of  subscription,  the  asso- 
ciation shall  pay  to  the  subscriber  the  full  amount  of  the  judgment 
and  the  cost  assessed  therewith,  if  the  subscriber  shall  have  given  the 
association  notice  of  the  bringing  of  the  action  upon  which  the  judg- 
ment was  recovered  and  an  opportunity  to  appear  and  defend  same  in 
his  or  its  name.  (Acts  35th  Leg.,  Chap.  103,  Sec.  21,  Part  III.) 

Note. —  (1)  Above  section  of  this  act,  relating  to  the  payment  Of  judgments 
and  costs,  applies  to  stock  companies  as  well  as  to  mutual  companies  and  recip- 
rocal associations.  (Opinion  of  Attorney  General,  September  12,  1913.) 

(2)  The  Texas  Workmen's  Compensation  Law  has  no  application  over  in- 
juries in  such  manner  and  in  such  places  as  would  give  the  courts  of  admiralty 
jurisdiction.  However,  the  Texas  Employers'  Insurance  Association  has  power 
to  insure  the  United  States  Shipping  Board,  the  employer  not  the  employe, 
against  claims  arising  from  judgments  for  damages  against  the  employer  ren- 
dered either  in  the  admiralty  or  common  law  courts.  (Opinion  of  Attorney 
General,  January  12,  1921.) 

Existing  Corporate  Powers  of  Association. 

376.  The  corporate  powers  of  the  association  shall  not  expire  be- 
cause of  failure  to  issue  policies  or  to  make  insurance.      (Acts  35th 
Leg.,  Chap.  103,  Sec.  22,  Part  III.) 

Association  Shall  Maintain  Adequate  Reserves. 

377.  The  association  shall  set  up  and  maintain  reserves  adequate  to 
meet  anticipated  losses  and  carry  all  claims  to  maturity  and  policies 
to  termination,  which  reserves  shall  be  computed  in  accordance  with 
such  rules  as  shall  be  approved  by  the  Commissioner  of  Insurance  and 
Banking.     (Acts  35th  Leg.,  Chap.  103,  Sec.  23,  Part  III.) 

PAET  IV. 
Definitions. 

378.  The  following  words  and  phrases  as  used  in  this   act  shall, 
unless  a  different  meaning  is  plainly  required  by  the  context,  have  the 
following  meanings,  respectively : 

"Employer"  shall  mean  any  person,  firm,  partnership,  association  of 
persons  or  corporations  or  their  legal  representatives  that  makes  con- 
tracts of  hire. 

"Employe"  shall  mean  every  person  in  the  service  of  another  under 
any  contract  of  hire,  expressed  or  implied,  oral  or  written,  except  mas- 
ters of  or  seamen  on  vessels  engaged  in  interstate  or  foreign  commerce, 
and  except  one  whose  employment  is  not  in  the  usual  course  of  the 
trade,  business,  profession  or  occupation  of  his  employer. 

Note. —  (1)  A  partner  in  a  firm  of  employers  to  whom  a  workmen's  compen- 
sation policy  is  issued  covering  the  employes  of  such  firm  is  not  an  employe  of 
such  firm  within  the  meaning  of  the  Texas  compensation  law  and  is  not  pro- 
tected under  such  a  workmen's  compensation  policy. 

(2)  A  trustee  operating   as   a   real  trust  is  not  an   employe  of   such   trust 
within  the  meaning  of  the  said  Act.     The  remuneration  received  by  such  partner 
or  trustee  should  not  be  included  in  the  payroll  in  estimating  the  premium  to 
be  paid  for  a  workmen's  compensation  policy. 

(3)  No  special  contract  could  be  made  whereby  partners,  trustees,  operating 
real   trust   and   officers   of   corporations    while   acting   solely    as    such,    could    be 


INSURANCE  LAWS  OF  TEXAS.  137 

treated  as  employes  and  covered  by  such  policies.      (Opinion  of  Attorney  Gen- 
eral, March  5,  1920.) 

The  words  "legal  beneficiaries,"  as  used  in  this  act,  shall  mean  the 
relatives  named  in  Section  8a,  Part  I  (Sec.  311),  of  this  act.  "Asso- 
ciation" shall  mean  the  "Texas  Employers'  Insurance  Association"  or 
any  other  insurance  company  authorized  under  this  act  to  insure  the 
payment  of  compensation  to  injured  employes  or  to  the  beneficiaries  of 
deceased  employes. 

"Subscriber"  shall  mean  any  employe  who  has  become  a  member  of 
the  association  by  paying  the  required  premium;  provided,  that  the  as- 
sociation holds  a  license  issued  by  the  Commissioner  of  Insurance  and 
Banking,  as  provided  for  in  Section  12,  Part  III  (Sec.  362),  of  this  act. 

"Average  weekly  wages"  shall  mean : 

1.  If  the  injured  employe  shall  have  worked  in  the  employment  in 
which  he  was  working  at  the  time  of  the  injury,  whether  for  the  same 
employer  or  not,  substantially  the  whole  of  the  year  immediately  pre- 
ceding the  injury,  his  average  annual  wages  shall  consist  of  three  hun- 
dred times  the  average  daily  wage  or  salary  which  he  shall  have  earned 
in  such  employment  during  the  days  when  so  employed. 

2.  If  the  injured  employe  shall  not  have  worked  in  such  employ- 
ment during  substantially  the  whole  of  the  year,  his  average  annual 
wages  shall  consist  of  three  hundred  times  the  average  daily  wage  or 
salary  which  an  employe  of  the  same  class  working  substantially  the 
whole  of  such  immediately  preceding  year  in  the  same  or  in  a  similar 
employment  in  the  same  or  a  neighboring  place,  shall  have  earned  in 
such  employment  during  the  days  when  so  employed. 

3.  When  by  reason  of  the  shortness  of  the  time  of  the  employment 
of  the  employe,  or  other  employe  engaged  in  the  same  class  of  work  in 
the  manner  and  for  the  length  of  time  specified  in  the  above  Subsec- 
tions 1  and  2,  or  other  good  and  sufficient  reasons,  it  is  impracticable- 
to  compute  the  average  weekly  wages  as -above  defined,  it  shall  be  com- 
puted by  the  board  in  any  manner  which  may  seem  just  and  fair  to- 
both  parties. 

4.  Said  wages  shall  include  the  market  value  of  board,   lodging,, 
laundry,  fuel  and  other  advantages  which  can  be  estimated  in  money,, 
which  the  employe  receives  from  the  employer  as  part  of  his  remuner- 
ation.    Any  sums,  however,  which  the  employer  has  paid  to  the  em- 
ploye to  cover  any  special  expenses  entailed  on  him  by.  the  act  of  his 
employment  shall  not  be  included. 

5.  The  average  weekly  wages  of  an  employe  shall  be  one-fifty-second 
(1-52)  part  of  the  average  annual  wage. 

The  terms  "injury"  or  "personal  injury,"  as  used  in  this  act,  shall  be 
construed  to  mean  damage  or  harm  to  the  physical  structure  of  the  body 
and  such  diseases  or  infection  as  naturally  result  therefrom. 

The  term  "injury  sustained  in  the  course  of  employment/'  as  used 
in  this  act,  shall  not  include: 

1.  An  injury  caused  by  the  act  of  God,  unless  the  employe  is  at  the 
time  engaged  in  the  performance  of  duties  that  subject  him  to  a  greater 
hazard  from  the  act  of  God  responsible  for  the  injury  than  ordinarily 
applies  to  the  general  public. 

2.  An  injury  caused  by  an  act  of  a  third  person  intended  to  injure 


138  INSURANCE  LAWS  OF  TEXAS. 

the  employe  because  of  reasons  personal  to  him  and  not  directed  against 
him  as  an  employe,  or  because  of  his  employment. 

3.  An  injury  received  while  in  a  state  of  intoxication. 

4.  An  injury  caused  by  the  employe's  wilful  intention  and  attempt 
,to  injure  himself,  or  to  unlawfully  injure  some  other  person,  but  shall 
include  all  other  injuries  of  every  kind  and  character  having  to  do  with 
and  originating  in  the  work,  business,  trade  or  profession  of  the  em- 
ployer received  by  an  employe  while  engaged  in  or  about  the  further- 
ance of  the  affairs  or  business  of  his  employer  whether  upon  the  em- 
ployer's premises  or  elsewhere.      (Acts  35th  Leg.,  Chap.   103,   Sec.   1, 
Part  IV.) 

,  Note. —  ( 1 )  The  word  "employe,"  defined  in  this  section,  embraces  every  per- 
son whether  a  laborer  or  an  officer  in  the  service  of  another  under  any  contract 
of  hire,  and  includes  the  officers  of  a  corporation.  (Opinion  of  Attorney  Gen- 
eral, February  3,  1916.) 

(2)  Where  employes  are  under  the  direction  and  control  of  their  employers 
as  to  the  work  to  be  done  and  the  manner  of  its  doing,  then  they  should  be 
included  in  the  payroll  of  the  company  employing  them  and  are  in  all  things 
[entitled  to  the  benefits  of  the  Workmen's  Compensation  Act,  regardless  of  the 
fact  that  they  may  be  paid  by  commission.  The  term  "employe,"  as  used  in 
our  compensation  act,  by  reason  of  its  definition  as  being  "a  person  in  the 
service  of  another  under  contract  of  hire,  etc.,"  must  be  construed  to  mean 
the  servant  of  another  in  the  sense  that  the  term  servant  is  used  in  describing 
the  legal  relationship  known  as  master  and  servant.  In  determining  who  an 
employe  is  within  the  meaning  of  the  act  the  controlling  question  is  whether 
or  not  the  employe  is  subject  to  the  direction  and  control  of  the  person  em- 
ploying him,  to  the  extent  of  prescribing  what  work  shall  be  done  and  how  it 
shall  be  done.  (Opinion  of  Attorney  General,  February  11,  1916.) 

Certain  Officers  of  a  Corporation  Subscriber  Not  Considered  to  Be  Em- 
ployes. 

379.  The   president,   vice-president   or   vice-presidents,   secretary   or 
other  officers  thereof  provided  in  its  charter  or  by-laws  and  the  directors 
of  any  corporation  which  is  a  subscriber  to  this  act  shall  not  be  deemed 
Or  held  to  be  an  employe  within  the  meaning  of  that  term  so  defined 
in  the  preceding  section  hereof.     (Acts  35th  Leg.,  Chap.  103,  Sec.  la, 
Part  IV.) 

Note. — Officers  and  directors  of  a  corporation,  acting  as  such,  are  not  employes 
within  the  meaning  of  said  Act,  but  when  employed  by  the  corporation  in  other 
capacities,  then  they  are  not  excluded  from  the  benefits  of  the  Act  provided 
their  services  bring  them  within  the  definition  of  employe.  (Opinion  of  At- 
torney General,  March  5,  1920.) 

Any  Insurance  Company  Transacting  Liability  or  Accident  Business 
Within  This  State,  Including  Mutual  and  Reciprocal  Insurance  Com- 
panies, Shall  Have  the  Same  Bight  to  Insure  the  Liability. 

380.  Any  insurance  company,  which  term  shall  include  mutual  and 
reciprocal  companies,  lawfully  transacting  a  liability  or  accident  busi- 
ness in  this  State,  shall  have  the  same  right  to  insure  the  liability  and 
pay  the  compensation  provided  for  in  Part  I  of  this  act,  and  when 
such  company  issues  a  policy  conditioned  to  pay  such  compensation,  the 
holder  of  such  said  policy  shall  be  regarded  as  a  subscriber  so  far  as 
applicable  under  this  act,  and  when  such  company  insures  such  pay- 
ment of  compensation  it  shall  be  subject  to  the  provisions  of  Parts  I, 


INSURANCE  LAWS  OF  TEXAS.  139 

II  and  IV  and  of  Sections  10,  17,  18a  and  21  of  Part  III  (Sees.  360, 
370,  372  and  375)  of  this  act,  and  shall  file  with  the  Commissioner  of 
Insurance  and  Banking  its  classification  of  hazards  with  the  rates  of 
premium  respectively  applicable  to  each,  none  of  which  shall  take  effect 
until  the  Commissioner  of  Insurance  and  Banking  has  approved  same 
as  adequate  to  the  risks  to  which  they  respectively  apply  and  not  less 
than  charged  by  the  association,  and  such  company  may  have  and  exer- 
cise all  of  the  rights  and  powers  conferred  by  this  act  on  the  association 
created  hereby,  but  such  rights  and  powers  shall  not  be  exercised  by  a 
mutual  or  reciprocal  organization  unless  such  organization  has  at  least 
50  subscribers  who  have  not  less  than  2000  employes.  (Acts  35th  Leg., 
Chap.  103,  Sec.  2,  Part  IV.) 

Note. —  (1)  Under  the  Workmen's  Compensation  law,  insurance  companies 
doing  business  are  required  to  file  their  classification  of  premiums  with  the 
Commissioner  of  Insurance  and  Banking,  and  he  is  required  to  approve  same 
before  any  policies  are  issued,  regardless  of  whether  the  Industrial  Accident 
Board  has  been  organized  or  not.  (Opinion  of  Attorney  General,  August  30, 
1913.) 

(2)  An  employer  in  order  to  receive  benefits  of  this  Act  must  either  become 
a  member  of  the  Texas  Employers'  Insurance  Association  or  take  a  policy   in 
some  licensed  company,  and  has  right  to  elect  either  to  be  a  member  of  such 
association  or  take  a  policy  in  a  licensed  company.     (Opinion  of  Attorney  Gen- 
eral, September  6,   1913.) 

(3)  Sections  10  and   17  of  part  III,  requiring  the  filing  with  the  Commis- 
sioner of  Insurance  and  Banking  of  lists  of  subscribers  of  each,  and  any  pro- 
posed premium,  assessment,  dividend,  or  distribution  of  subscribers,  do  not  apply 
to  capital  stock  insurance  companies,  but  do  apply  to   mutual   companies  and 
reciprocal  associations.     Section  21  of  part  III  of  said  Act  relating  to  the  pay- 
ment of  judgments  and  costs,  apples  to  stock  companies  as  well  as  to  mutual 
companies  and  reciprocal  associations.      (Opinion  of  Attorney  General,   Septem- 
ber 12,  1913.) 

(4)  Capital  stock  companies  have  the  right  to  write  workmen's  compensa- 
tion insurance  and  may  have  and  exercise  all  the  rights  and  powers  conferred 
on  the  Texas   Employers'  Insurance  Association,  but  they  must  exercise  them 
under  the  same  restrictions,  and  are  held  subject  to  the  provisions  of  Sections 
13,  14,  15,  and  16  of  part  III  of  the  Workmen's  Compensation  law.      (Opinion 
of  Attorney  General,  May  29,  1914.) 

Subscriber  Entitled  to  Refund  of  Unearned  Portion  of  Premium. 

381.  Any  subscriber  who  has  paid  a  premium  as  provided  in  Sec- 
tion 1,  Part  IV  (Sec.  378),  of  this  act,  may,  upon  application  to  the 
board  and  to  the  association  and  after  a  showing  satisfactory  to  the 
board,  that  he  has  notified  all  of  his  employes  in  such  manner  as  may 
be  required  by  the  board,  cease  to  be  a  subscriber  and  be  entitled  to  a 
refund  of  the  unearned  portion  of  his  premium,  subject,  however,  to 
any  rule  approved  by  the  Commissioner  of  Insurance  and  Banking  as  to 
the  minimum  premiums  or  short  rate  cancellation.      (Acts  35th  Leg., 
Chap.  103,  Sec.  3,  Part  IV.) 

Subscriber  Misrepresenting  Payroll  Subject  to  Penalty. 

382.  Any  subscriber  who  shall  wilfully  misrepresent  the  amount  of 
his  payroll  to  the  association  writing  his  insurance  upon  which  any 
premium  under  this  act  is  to  be  based  shall  be  liable  to  the  association 
insuring  the  compensation  of  his  employes  in  an  amount  not  to  exceed 


140  INSURANCE  LAWS  or  TEXAS. 

ten  times  the  amount  of  the  difference  between  the  premium  which  he 
paid  and  the  amount  which  said  subscriber  should  have  paid  had  his 
payroll  been  correctly  computed;  and  the  liability  to  said  association 
for  such  misrepresentation,  if  it  was  received  thereby,  may  be  enforced 
in  a  civil  action  in  any  court  of  competent  jurisdiction  in  this  State. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  3a,  Part  IV.) 

This  Act  Does  Not  Repeal,  But  Merely  Amends  and  Continues  in  Force 
the  Original  Workmen's  Compensation  Law. 

383.  No  inchoate,  vested,  matured,  existing  or  other  rights,  reme- 
dies, powers,  duties  or  authority,  either  of  any  employe  or  legal  bene- 
ficiary, or  of  the  board,  or  of  the  association,  or  of  any  other  person 
shall  be  in  any  way  affected  by  any  of  the  amendments  herein  made  to 
the  original  law  hereby  amended,  but  all  such  rights,  remedies,  powers, 
duties  and  authority  shall  remain  and  be  in  force  as  under  the  original 
law  just  as  if  the  amendments  hereby  adopted  had  neve.r  been  made, 
and  to  that  end  it  is  hereby  declared  that  said  original  law  is  not  re- 
pealed, but  the  same  is,  and  shall  remain  in  full  force  and  effect  as  to 
all  such  rights,  remedies,  powers,  duties  and  authority;  and  further, 
this  act,  in  so  far  as  it  adopts  the  law  of  which  it  is  an  amendment, 
is  a  continuation  thereof,  and  only  in  other  respects  a  new  enactment. 
(Acts  35th  Leg.,  Chap.  103,  Sec.  3b,  Part  IV.) 

Further  Definition  of  Terms  Contained  in  This  Act. 

384.  Any  reference  to  any  employe  herein  who  has  been  injured 
shall,  when  the  employe,  is  dead,  also  include  the  legal  beneficiaries,  as 
that  term  is  herein  used,  of  such  employe  to  whom  compensation  may 
fee  payable.    Whenever  the  word  "board"  is  used  in  this  act,  it  shall  be 
construed  to  mean  Industrial  Accident  Board  created  by  this  act.    When- 
ever in  this  act  the  singular  is  used,  the  plural  shall  be  included :  when- 
ever the  masculine  gender  is  used,  the  feminine  and  neuter  shall  be 
included.     (Acts  35th  Leg.,  Chap.  103,  Sec.  3b,  Part  IV.) 

Unconstitutionality  of  Part  of  Law  Not  to  Affect  Whole  Law. 

385.  Should  any  part  of  this  act  for  any  reason  be  held  to  be  in- 
valid, unconstitutional  or  inoperative,  no  other  part  or  parts  thereof 
shall  be  held  affected  thereby,  and  if  any  exception  to  or  any  limita- 
tion upon  any  general  provision  herein  contained  shall  be  held  to  be 
unconstitutional  or  invalid  or  ineffective,  the  general  provisions  shall, 
nevertheless,  stand  effective-  and  valid  as  if  it  has  been  enacted  with- 
out limitation   or   exceptions.     (Acts   35th   Leg.,    Chap.    103,    Sec.   4, 
Part  IV.) 

Association  May  Make  Advance  Payments  of  Compensation. 

386.  In  cases  of  emergency  or  impending  necessity  the  association 
may  make  advanced  payments  of  compensation  to  any  employe  during 
the  period  of  his  incapacity  or  to  his  beneficiaries  within  the  terms  of 
this  act,  and  when  the  same  is  either  directed  or  approved  by  the  board 
it  shall  be  credited  as  against  any  unaccrued  compensation  due  said 
employe  or  beneficiaries.     (Acts  35th  Leg.,  Chap.  103,  Sec.  5,  Part  IV.) 


INSURANCE  LAWS  OF  TEXAS.  141 

Reports  of  Accidents  Not  to  Be  Considered  as  Admissions  or  Evidence. 

387.  The  reports  of  accidents  required  by  this  act  to  be  made  by 
subscribers  shall  not  be  deemed  and  considered  as  admissions  and  evi- 
dence against  the  association  or  the  subscriber  in  any  proceedings  be- 
fore the  board  or  elsewhere  in  a  contested  case  where  the  facts  set  out 
therein  or  in  any  one  of  them  is  sought  to  be  contradicted  by  the  asso- 
ciation or  subscriber.     (Acts  35th  Leg.,  Chap.  103,  Sec.  6,  Part  IV.) 

Employers'   Liability   Insurance — Manner   of   Reporting    and    Calculating 
Reserve. 

388.  Every  insurance  company  which  has  for  ten  years  or  more  under- 
taken to  insure  persons,  firms  or  corporations  against  loss  or  damage 
on  account  of  the  bodily  injury  or  death  by  accident  of  any  person  for 
which  loss  or  damage  said  persons,  firm  or  corporations  are  respectively 
responsible  shall,  on  or  before  the  first  day  of  October  in  each  year 
render  to  the  Insurance  Commissioner  a  statement  in  writing  of  its 
business  transacted  in  the  United  States,  which  shall  show  separately 
for  each  of  the  five  calendar  years  constituting  the  first  half  of  the  period 
of  ten  years  next  preceding  the  thirty-first  day  of  December  of  the  year  m 
which  the  statement  is  made. 

(1)  The  number  of  persons  reported  injured  under  all  its  forms  of 
liability  policies,  whether  such  injuries  were  reported  to  the  home  office 
of  the  company  or  to  any  of  its  representatives,  and  whether  such  in- 
jury resulted  in  loss  to  the  company  or  not. 

(2)  The  amount  that  on  or  before  the  thirty-first  day  of  August  of 
the  year  in  which  the  statement  is  made  had  been  paid  on  account  or 
in  consequence  of  all  injuries  so  reported,  including  therein  all  pay- 
ments on  suits  arising  from  such  injuries. 

(3)  The  number  of  suits  or  actions  under  su^h  policies  on  account 
of  injuries  reported  which  have  been  settled  either  by  payments  or 
compromise. 

(4)  The  amount  paid  in  settlement  of  such  suits  or  actions  on 
or  before  the  thirty-first  day  of  August  of  the  year  when  the  state- 
ment is  made,  including  therein  all  payments  made  on  account  or  in 
consequence  of  injuries  from  which  the  suits  arose,  whether  prior  to  or 
later  than  the  date  when  the  suits  were  brought.     Every  such  company 
shall,  in  its  financial  statements  hereafter  made  in  this  State,  use  the 
•experience  so  ascertained  for  computing  its  outstanding  losses  under 
all  its  forms  of  liability  policies,  irrespective  of  the  date  when  the  pol- 
icies were  issued.     The  average  cost  per  suit  of  settling  such  cases  as 
computed  by  the  data  required  in  this  article  shall  be  multiplied  by 
the  number  of  suits  or  actions  pending  on  account  of  injuries  repprted 
prior  to  eighteen  months  previous  to  the  date  on  which  the  condition 
of  the  company  is  to  be  ascertained  and  shown,  which  suits  or  actions 
are  being  defended  for  or  on  account  of  a  holder  of  any  such  policy, 
-also  the  average  cost  on  account  of  each  injured  person,  determined  as 
aforesaid  from  the  company's   experience,   shall  be  multiplied  by  the 
number  of  injuries  reported  within  the  18  months  prior  to  making  the 
statement  of  the  company's  condition,  whether  such  injuries  were  re- 
ported to  the  home  office  of  the  company,  or  to  any  of  its  representa- 
tives.    From  the  sum  of  these  two  products  so  ascertained  there  shall 
be  deducted  the  amount  of  all  payments  made  on  account  or  in  conse- 


142  INSURANCE  LAWS  OP  TEXAS. 

quence  of  said  injuries  reported  within  eighteen  months,  this  amount 
so  deducted  to  be  taken  as  of  the  date  at  which  the  said  statement 
is  made.  The  sum  remaining  after  making  this  deduction  shall  be 
charged  as  the  liability  of  the  company  on  account  of  outstanding 
losses.  Any  admitted  company  issuing  liability  contracts  which  by 
reason  of  its  limited  experience  in  liability  underwriting  cannot  fur- 
nish the  information  required  by  this  section  shall,,  nevertheless,  until 
it  is  able  to  comply  with  said  requirements,  be  charged  with  a  lia- 
bility for  outstanding  losses  upon  all  kinds  of  its  liability  policies  an 
amount  not  less  than  the  amount  resulting  from  the  following  process. 
(E.  S.,  Art.  4941.) 

Report  Shall  Contain. 

389.  The  number  of  suits  or  actions  pending  on  account  of  injuries 
reported  prior  to  eighteen  months  previous  to  the  date  of  making  up 
the  statement,  whether  such  injuries  were  reported  to  the  home  office 
of  the  company  or  to  any  of  its  representatives,  which  are  being  de- 
fended on  account  of  the  holder  of  any  policy,  shall  be  multiplied  by 
the  average  cost  per  suit  as  shown  by  the  average  experience  of  all 
other  admitted  liability  companies  ascertained  from  the  data  required 
by  this  section,  also  the  number  of  injuries  reported  under  said  policies 
at  any  time  within  eighteen  months  of  making  up  the  statement, 
whether  reported  to  the  home  office  of  the  company,  or  to  any  of  its 
representatives,  and  whether  such  injuries  resulted  in  loss  to  the  com- 
pany or  not,  shall  be  multiplied  by  the  average  cost  for  each  injured 
person  as  shown  by  the  average  of  said  experience  of  all  other  ad- 
mitted liability  companies,  ascertained  from  the  data  required  by  this 
section.  From  the  sum  of  these  two  products  there  shall  be  deducted  the 
amount  of  all  payments  made  on  account  of  or  in  consequence  of  said 
injuries  reported  within  eighteen  months,  this  amount  to  be  taken  as 
of  the  date  at  which  the  statement  is  made.  A  sum  not  less  than  the 
amount  remaining  after  this  deduction  shall  be  charged  as  a  liability 
for  outstanding  losses  to  liability  companies  covered  by  the  provisions 
of  this  paragraph.  The  average  cost  for  suits  and  for  injured  persons 
required  by  this  paragraph  shall,  on  or  before  the  first  day  of  Decem- 
ber of  each  year,  be  furnished  by  the  Insurance  Commissioner  to  every 
such  company  which  has  not  had  an  experience  of  ten  years  in  liability 
underwriting.  Besides  the  reserves  provided  for  in  this  article,  each 
such  company  shall  be  charged  as  a  liability  with  all  unpaid  losses  of 
which  the  company  received  notice  on  or  before  December  31st  and 
all  other  debts  and  liabilities.  If  the  capital  stock  of  any  such  com- 
pany computing  its  liabilities  in  accordance  with  the  provisions  of  this 
article  shall  be  at  any  time  impaired  to  the  extent  of  20  per  cent 
thereof,  it  shall  be  the  duty  of  the  Commissioner  of  Insurance  and 
Banking  to  give  notice  to  the  company  to  make  good  its  whole  capital 
stock  within  sixty  days,  and  if  this  is  not  done  he  shall  require  the 
company  to  cease  to  do  business  within  this  State,  and  shall  thereupon, 
in  case  the  company  is  organized  under  the  authority  of  the  State,  im- 
mediately institute  legal  proceedings  to  wind  up  the  affairs  of  such 
company.  (E.  S.,  Art.  4941.) 


INSURANCE  LAWS  OF  TEXAS.  143 

Commissioner  May  Accept  Certificate,  When. 

390.  The  Commissioner  of  Insurance  and  Banking,  in  calculating 
the  reserve  liability  of  any  such  company,  may  accept  the  certificate 
of  the  officer  of  any  other  State  charged  with  the  duty  of  supervising 
such  company,  as  to  any  such  company  organized  under  the  laws  of 
such  State;  provided,  such  certificate  shows  that  such  liability  has  been 
computed  in  accordance  with  the  provisions  of  the  preceding  (article) 
section.  (E.  S.,  Art.  4942.) 


CHAPTER  XV. 

MUTUAL  ASSESSMENT  ACCIDENT  INSURANCE — HOME  COMPANIES. 

Incorporation  of. 

391.  Any  number  of  persons,  not  less  than  five,  may  organize  a  cor- 
poration for  the  purpose  of  transacting  business  of  accident  insurance, 
upon  the  co-operate  or  mutual  assessment  plan,  without  capital  stock, 
by  complying  with  the  provisions  of  this  chapter;  provided,  that  all 
such  persons  shall  be  bona  fide  citizens  and  residents  of  the  State  of 
Texas.     (E.  S.,  Art.  4794.) 

Note. — A  mutual  assessment  liability  accident  insurance  company  cannot  be 
lawfully  organized  in  Texas  under  the  provisions  of  the  law  authorizing  the 
organization  of  mutual  accident  insurance  companies.  (Opinion  of  Attorney 
General,  April  27,  1915.) 

Charter,  Requirements  of. 

392.  Such  persons  must  sign  and  acknowledge  before  an  officer  duly 
authorized  to  take  acknowledgments  of  deeds  a  written  charter  setting 
forth : 

(1)  The  name  of  such  corporation,  which  name  must  not  so  re- 
semble the  name  of  any  other  company  engaged  in  the  insurance  busi- 
ness in  this  State  as  to  cause  a  probability  of  confusion. 

(2)  The  number  of  its  directors  and  the  names  and  residences  of 
those  who  are  to  act  as  such  for  the  first  year. 

Note. —  (1)  A  mutual  assessment  accident  insurance  company  must  have  not 
less  than  seven  nor  more  than  thirteen  directors.  (Opinion  of  Attorney  General, 
January  26,  1916.) 

(2)  Must  have  not  less  than  seven  directors  specified  in  the  charter.     (Opin- 
ion of  Attorney  General,  August  23,  1916.) 

(3)  The  location  of  its  principal  office,  which  must  be  within  the 
State  of  Texas. 

(4)  It  'shall  state  that  said  corporation  shall  have  no  capital  stock, 
and  shall  give  the  purpose  for  which  same  is  organized  and  the  plan 
upon  which  it  proposes  to  do  business  by  stating  that  its  said  business 
shall  be  conducted  upon  the  assessment  plan  without  lodges. 

(5)  The  term  for  which  it  is  to  exist,  which  shall  not  be  for  more 
than  fifty  years.     (E.  S.,  Art.  4795.) 


114  INSURANCE  LAWS  OF  TEXAS. 

Charter  and  Affidavits  Presented  to  Attorney  General — Two  Hundred 
Bona  Fide  Applicants  Representing  One  Hundred  Thousand  Dollars 
Insurance  Must  Sign  Application — Bank  Certify  to  Deposit. 

393.  Said  charter  shall  be  presented  to  the  Attorney  General  of  this 
State,  accompanied  by  affidavits  of  all  said  incorporators,  showing  that 
they  are  bona  fide  citizens  of  this  State,  by  bona  fide  applications  for 
insurance  in  said  company  from  not  less  than  two  hundred  applicants, 
for  not  less  than  one  hundred  thousand  dollars  insurance  by  an  affi- 
davit by  one  of  its  incorporators  showing  that  each  of  said  applicants 
has  deposited  with  affiant  at  least  eighty  cents  on  each  thousand  dol- 
lars insurance  so  applied  for  by  him,  and  by  a  certificate  of  some  sol- 
vent bank  showing  that  all  such  advance  funds  are  deposited  therein, 
to  be  turned  over  to  the  treasurer  of  such  corporation  when  organized. 
Said  Attorney  General  shall  carefully  examine  all  said  instruments  and 
if  he  finds  the  same  are  in  conformity  with  the  requirements  of  this 
chapter,  he  shall  give  his  approval,  and  file  the  same  with  the  Commis- 
sioner of  Insurance  and  Banking.     (E.  S.,  Art.  4796.) 

Note. — 'The  company,  before  the  charter  may  be  approved,  must  have  not  less 
than  two  hundred  separate  applicants  for  insurance.  (Opinion  of  Attorney 
General,  August  23,  1916.) 

Charter  Filed  With  Commissioner  With  Approval  of  Attorney  General, 
Accompanied  by  a  Filing  Fee  of  $20 — Certified  Copy  of  Charter  Fee 
of  $1 — Association  a  Body  Corporate. 

394.  When  said  charter  has  been  filed  with  the  Commissioner,  with 
the  approval  of-  the  Attorney  General,  accompanied  by  a  filing  fee  of 
$20,  the  Commissioner  shall  record  the  said  charter  and  certificate  of 
the  Attorney  General  in  a  book  kept  for  that  purpose,  and  shall,  upon 
the  receipt  of  fee  for  certified  copy  of  charter,  of  one  dollar,  furnish  a 
certified  copy  of  such  charter  and  certificate  of  the  Attorney  General 
to  the  corporators,  and  shall  return  to  such  corporators  all  such  appli- 
cations for  membership,  also  a  certificate  that  such  charter  has  been 
filed  and  recorded  in  his  office,  and  that  said  company  is  duly  incor- 
porated under  the  laws  of  the  State  of  Texas  and  authorized  to  trans- 
act the  business  set  forth  in  its  charter,  stating  same;  upon  the  filing 
and  recording  of  which  charter  said  association  shall  become  a  body 
politic  and  corporate,  with  -the  right  to  transact  its  said  business  in 
this  State  and  elsewhere,  according  to  the  provisions  of  this  chapter, 
to  hold  property  and  alienate  same,  to  contract,  sue  and  be  sued  under 
its  corporate  name,  and  by  that  name  shall  have  succession,  and  may 
by  its  board  of  directors  make  by-laws  not  inconsistent  with  law  and 
shall  carry  on  its  business  subject  to  the  provisions  of  this  chapter. 
(E.  S.,  Art.  4797.) 

Shall  Be  Deemed  to  Be  Engaged  in  the  Business  of  Mutual .  Assessment 
Accident  Insurance,  When — Subject  Only  to  the  Provisions  of  This 
Act. 

395.  Any  corporation  which  issues  any  certificate,  policy  or  other 
evidence  of  interest  to  its  members  whereby  upon  his  death  or  total 
disability  any  money  is  to  be  paid  by  such  corporation  to  such  member 
or  beneficiary  designated  by  him,  which  money  is  derived  from  volun- 
tary contributions  or  from  admission  fees,  dues  and  assessments  or  any 


INSURANCE  LAWS  OF  TEXAS.  145 

of  them  collected  or  to  be  collected  from  the  members  thereof,  and 
interest  and  accretions  upon,  and  wherein  the  paying  of  such  money 
is  conditioned  upon  the  same  being  realized  in  the  manner  aforesaid, 
and  wherein  the  money  so  realized  is  applied  to  the  uses  and  purposes 
of  said  corporation  and  the  expense  of  the  management  and  prosecu- 
tion of  its  business,  and  which  has  no  subordinate  lodges  or  similar 
bodies,  shall  be  deemed  to  be  engaged  in  the  business  of  mutual  assess- 
ment accident  insurance  as  contemplated  by  this  chapter,  and  shall  be 
subject  only  to  the  provisions  of  this  chapter.  (E.  S.,  Art.  4798.) 

Note. — A  mutual  assessment  accident  insurance  company  may  provide  in  its 
by-laws  that  the  money  from  which  its  policy  obligations  are  to  be  paid  shall 
oe  by  dues  paid  by  the  members  instead  of  assessments,  and  in  such  case,  the 
by-laws  may  also  provide  that  no  extra  assessments  shall  ever  be  levied  upon 
those  members  who  join  the  association  after  the  passage  of  such  by-laws. 
(Opinion  of  Attorney  General,  April  11,  1914.) 

No  Stock  Certificates — No  Dividends — Pay  No  Profits — Annual  Meetings. 

396.  Such  corporations  shall  issue  no  certificates  of  stock,  shall  de- 
clare no  dividends,  shall  pay  no  profits,  and  the  salaries  of  all  officers 
shall  be  designated  in  its  by-laws;  and  such  by-laws  shall  provide  for 
annual  members'  meetings  in  which  each  member  shall  be  entitled  to 
vote  only  in  person  to  the  amount  of  insurance  held  by  him.     (E.  S., 
Art.  4799.) 

Members  and  Directors  to  Vote  on  Adoption  of  By- Laws  or  Amendments 
Thereto;  Provided. 

397.  Every  such  corporation  must,  before  the  adoption  of  any  by- 
laws or  amendments  thereto,  cause  the  same  to  be  mailed  to  all  the  mem- 
bers and  directors  of  such  association  together  with  the  notice  of  the 
time  and  place  when  the  same  shall  be  considered,  and  same  shall  be 
so  mailed  at  least  ten  days  before  the  time  for  such  meeting;  provided, 
that  the  provisions  of  this  article  shall  not  apply  to  by-laws  adopted 
within  sixty  days  after  the  incorporation  of  such  company.      (E.   S., 
Art.  4800.) 

Note. — Provisions  in  the  by-laws  for  notice  of  accident  within  ten  days  are 
void,  under  Revised  Statutes,  5714.  By-laws  providing  that  on  dissolution  of 
its  residue  of  property  should  become  the  property  of  its  then  existing  members 
is  invalid.  The  by-laws  cannot  confer  authority  on  the  board  of  directors  to 
repeal,  amend  or  enact  by-laws. 

Books  and  Papers  Subject  to  Examination. 

398.  All  books  and  papers  of  such  corporation  shall  at  all  reasonable 
times  be  open  for  examination  by  members  and  their  representatives. 
(E.  S.,  Art.  4801.) 

Commissioner  to  Examine  Financial  Conditions  Annually. 

399.  The  Commissioner  of  Insurance  and  Banking  shall  annually, 
or  as  often  as  he  deems  necessary,  in  person,  or  by  one  or  more  exam- 
iners, commissioned  in  writing,  visit  each  and  every  such  corporation 
and  examine  its  financial  condition  and  its  ability  to  meet  its  liabilities. 
He  shall  have  free  access  to  all  books  and  papers  of  the  corporation  or 
agents  thereof,  and  shall  have  power  to  examine,  under  oath,  the  offi- 


146  INSURANCE  LAWS  OF  TEXAS. 

cers,  agents  and  employes  of  such  corporation.  He  may  revoke  or 
modify  any  certificate  of  authority  issued  by  him,  when  any  conditions 
prescribed  by  law  for  granting  it  no  longer  exist.  The  expense  of  every 
such  examination  shall  be  paid  by  the  corporation  so  examined.  (R.  S., 
Art.  4802.) 

Statement  to   Be   Filed  With  the  Commissioner — What  It  Must   Show — 
Filing  Fees  $10 — Each  Certificate  or  Certified  Copy  Thereof  $1. 

400.  Every  such  corporation  shall,  on  the  first  day  of  January  of 
each  year,  or  within  sixty  days  thereafter,  make  and  file  with  the  Com- 
missioner of  Insurance  and  Banking  of  this  State  a  report  of  its  affairs 
and  operations  during  the  year  ending  on  the  thirty-first  day  of  Decem- 
ber immediately  preceding.  Such  report  shall  be  upon  blank  forms, 
to  be  provided  by  such  Commissioner,  and  shall  be  verified  by  the  oath 
of  the  secretary  of  such  corporation  and  shall  contain  answers  to  the 
following  questions: 

(1)  Number  of  certificates  or  policies  issued  or  members  admitted 
during  the  year. 

(2)  Amount  of  indemnity  affected  thereby. 

(3)  Number  of  death  losses. 

(4)  Number  of  death  losses  paid. 

(5)  Number  of  other  losses. 

(6)  Number  of  other  losses  paid. 

(7)  The  amount  received  from  each  assessment  in  each  class. 

(8)  Total  amount  paid  for  losses. 

(9)  Number  of  death  claims  for  which  assessments  have  been  made. 

(10)  Number  of  death  claims  compromised  or  resisted,  and  brief 
statement  of  reasons. 

(11)  Number  of  other  claims  for  which  assessment  has  been  made. 

(12)  Number  of  other  claims  compromised  or  resisted,   and  brief 
statement  of  the  reasons. 

(13)  Does  company  charge  annual  dues,  and,  if  so,  how  much? 

(14)  Total  amount  received  and  the  disposition  thereof. 

(15)  Does  the  company  use  moneys  received  for  payment  of  claims 
to  pay  expense  of  the  company  in  whole  or  in  part,  and,  if  so,  state 
the  amount  so  used? 

(16)  Give  total  amount  of  all  salaries  paid   officers  and  name  of 
each  salaried  officer  and  the  amount  paid  him. 

(17)  Does  the  company  guarantee  fixed  amount  to  be  paid  regard- 
less of  amounts  realized  from  assessments,  dues,  admission  fees,  etc.? 

(18)  If  so,  state  amount  guaranteed  and  the  security  therefor. 

(19)  Has  the  company  a  reserve  fund? 

(20)  If  so,  how  is  it  created  and  for  what  purpose;  the  amount 
thereof,  and  in  what  form,  and  how  invested. 

(21)  Has  the  company  more  than  one  class  of  members? 

(22)  If  so,  how  many  and  what,  and  give  the  amount  of  indemnity 
in  each. 

(23)  Give  number  of  members  in  each  class. 

(24)  State  when  the  company  was  organized. 

(25)  Number  of  policies  or  memberships  lapsed  during  the  year. 

(26)  Number  of  policies  of  each  class  at  beginning  and  at  end  of 
year. 


INSURANCE  LAWS  OF  TEXAS.  147 

(27)  All  assets  applicable  to  payment  of  insurance,  other  than  re- 
serve fund,  and  how  invested. 

(28)  Amount  received  from  all  sources  for  payment  of  losses  and 
the  disposition  thereof. 

And  in  case  such  corporation  fails  or  refuses  to  make  such  report  in 
full  within  said  time,  its  charter  and  franchise  shall  be  forfeited  as 
provided  in  Section  406  of  this  Digest.  The  following  fees  shall  be 
paid  annually:  Filing  annual  statement,  $10;  certificate  of  authority 
to  corporation,  $1;  each  certified  copy  thereof,  $1.  (R.  S.,  Art.  4803.) 

What  Each  Certificate  of  Membership  Must  Show — Company  May  Create 
a  Reserve  Fund,  May  Charge  a  Membership  Fee  Which  May  Be  Used 
for  Expenses — 60  Per  Cent  of  Amounts  Realized  From  All  Sources 
Must  Be  Used  in  Payment  of  Losses. 

401.  Each   certificate   of  membership,   policy   or   other  contract   of 
insurance  issued  by  such  company  shall  bear  on  its  face  in  red  letters 
the  following  words:     "The  payment  of  the  benefit  herein  provided 
for  is  conditioned  upon  its  being  collected  by  this  company  from  assess- 
ments and  other  sources  as  provided  in  its  by-laws" ;   provided,  that 
nothing  in  this  chapter  shall  be  construed  to  prevent  the  creation  of 
a  reserve  fund  by  any  such  organization,  which  fund,  or  its  accretions, 
or  both,  are  to  be  used  only  for  the  payment  of  losses  or  benefits,  as 
provided  in  the  by-laws  of  such  corporation;  provided,  further,  that 
such  corporation  may  charge  a  membership  or  admission  fee  of  not 
exceeding  three  dollars  upon  each  policy  issued,  the  proceeds  of  which 
may  be  placed  in  the  expense  fund,  and  that  at  least  sixty  per  cent 
of  all  amounts  realized  from  any  other  sources  shall  be  used  only  for 
the  payment  of  losses  or  benefits  as  they  occur,  or  the  balance  thereof 
remaining  after  paying  such  losses  or  benefits  transferred  to  such  re- 
serve fund;  provided,  further,  that  such  membership  fee  may  also  apply 
as  a  payment  or  credit  upon  the  initial  assessment  or  premium,  if  the 
by-laws  of  the  corporation  so  provide.     (R.  S.,  Art.  4804,  as  amended  by 
Sec.  1,  Chap.  149,  Acts  34th  Leg.) 

May  Insure  Against  Disability  Arising  From  Sickness  or  Disease,  and 
May  Pay  Funeral  Benefit  Not  Exceeding  $100. 

402.  Any  corporation  now  existing  or  hereafter  organized  under  the 
provisions  of  this  chapter  for  the  purpose  of  transacting  the  business 
of  a  mutual  assessment  accident  insurance  company  shall  have  and  is 
hereby  vested  with  the  authority  under  its  corporate  powers  to  engage 
in  the  business,  on  the  assessment  plan,  as  defined  in  this  chapter,  of 
insuring  against  disability  resulting  from  sickness  or  disease,  and  to 
pay  to  the  beneficiaries  of  its  deceased  members  a  funeral  benefit  which 
shall  not  exceed  the  sum  of  one  hundred   ($100)   dollars  in  event  of 
death  of  any  member  resulting  from   sickness  or   disease.     Provided, 
however,  that  in  enforcing  compliance  with  the  requirements  of  Article 
4796  (Sec.  393),  applications  for  insurance  against  disability  or  death 

-resulting  from  sickness  or  disease  shall  not  be  taken  into  consideration. 
(R,  S.,  4804a,  as  contained  in  Sec.  2,  Chap.  149,  Acts  34th  Leg.)       . 

Note. —  (1)  All  voluntary  contributions,  admission  fees,  dues  and  assessments 
collected  from  a  policyholder  by  a  mutual  assessment  accident  association  con- 
stitute the  premium  or  assessment  in  consideration  of  which  the  policy  is  issued; 


148  INSURANCE  LAWS  OF  TEXAS. 

and  all  such  collections  must,  under  the  law,  be  divided  and  used  in  the  pro- 
portion of  60  per  cent  for  losses  and  not  more  than  40  per  cent  for  expenses. 
Such  an  association  which  collects  a  specified  amount  under  the  name  of  "ad- 
mission fees"  must  divide  such  admission  fee  in  the  same  proportion,  and  the 
admission  fee  cannot  lawfully  be  deducted  from  the  dues  or  assessments  and 
used  for  expenses  only,  but  must  be  divided  in  the  same  proportion  as  other 
assessments,  60  per  cent  to  be  used  for  paying  losses  and  only  40  per  cent  for 
expenses.  (Opinion  of  Attorney  General,  September  13,  1913.) 

(2)  A  mutual  assessment  accident  insurance  company  can  engage  only  in 
accident  insurance,  except  it  may  issue  policies  insuring  against  disability  re- 
sulting from  sickness  or  disease,  and  in  connection  therewith  pay  to  the  bene- 
ficiaries of  its  deceased  members  a  funeral  benefit  which  shall  not  exceed  one 
hundred  dollars.  It  cannot  issue  straight  life  insurance  policies.  (Opinion  of 
Attorney  General,  August  17,  1916.) 

Notices  of  Assessment  Must  Show  What. 

403.  Each  notice  of  assessments  made  by  such  corporation  upon  its 
members  or  any  of  them  shall  truly  state  the  cause  and  purpose  of 
such  assessment,  amount  paid  on  the  last  claim  paid,  the  cause  of  dis- 
ability or  death,  the  name  of  the  member  for  whose  death  or  disability 
such  payment  was  made,  the  maximum  face  value  of  the  certificate  or 
policy,  and  in  case  of  disability  the  maximum  amount  provided  for  in 
such  policy  or  certificate  for  such  disability,  and  if  not  paid  in  full  the 
reason  therefor.     (E.  S.,  Art.  4805.) 

The  Bight,  With  Consent  of  Corporation,  to  Change  Name  of  Beneficiary. 

404.  Any  member  of  .such  corporation  shall  have  the  right  at  any 
time,  with  the  consent  of  such  corporation,  to  change  the  beneficiary 
in  his  policy  or  certificate,  without  requiring  the  consent  of  such  bene- 
ficiary, and  such  corporation  shall  give  consent  under  such  regulations 
as  may  be  prescribed  in  its  by-laws.     (E.  S.,  Art.  4806.) 

Amount  to  Be  Paid  on  Policy  Must  Be  Stipulated — Corporation  Must  Pay 
in  Full — Subject  to  Legal  Defenses;  Provided. 

405.  Every  policy  or  certificate  issued  by  any  such  corporation  shall 
specify  the  sum  of  money  which  it  promises  to  pay  upon  the  contin- 
gency insured  against,  and  the  number  of  days  after  the  receipt  of 
satisfactory  proof  of  the  happening  of  such  contingency  at  which  such 
payment  shall  be  made;  and  upon  the  happening  of  such  contingency 
such  corporation  shall  be  liable  for  the  payment  of  such  amount  in 
full  at  the  time  so  specified,  subject  to  such  legal  defenses  as  it  may 
have. against  same;  provided,  that  if  the  sum  realized  by  it  from  as- 
sessments made  in  accordance  with  its  by-laws  to  meet  such  payments, 
together  with  such   other  sums   as  its   by-laws   may   provide   shall   be 
used  for  that  purpose,  shall  be  insufficient  to  pay  such  sum  in  full  for 
which  it  is  so  liable,  then  the  payment  of  the  full  amount  so  realized 
shall  discharge  such  corporation  from  all  liability  by  the  reason  of  the 
happening  of  such  contingency,  and  in  that  event  such  corporation  shall 

be  liable  only  for  the  amount  so  actually  realized.     (E.  S.,  Art.  4807.) 

• 

Must  Comply  With  Requirements  of  This  Chapter  or  Forfeit  Charter. 

406.  If  any  corporation  not  incorporated  under  this  chapter  shall 
engage   in    any   branch   of   mutual   assessment   accident    insurance   as 
herein  defined,  or  if  any  corporation  organized  under  the  provisions 


INSURANCE  LAWS  OF  TEXAS.  149 

of  this  chapter  shall  transact  business  in  any  manner  except  as  herein 
authorized,  such  corporation  shall  in  either  event  be  subject  to  the  for- 
feiture of  its  charter  and  franchise  and  the  Attorney  General  of  this 
State  shall  immediately  institute  suit  to  forfeit  its  charter  and  dis- 
solve it.  (R.  S.,  Art.  4808.) 

Officers  and  Employes  Failing  to   Comply  With  the  Provisions  of   This 
Law  Subject  to  Imprisonment. 

407.  Any  officer  and  other  employe  of  a  mutual  insurance  company 
who  shall  use  or  appropriate,  or  knowingly  permit  to  be  used  or  ap- 
propriated by  another,  any  money  belonging  to  such  mutual  insurance 
company  in  any  manner  other  than  is  herein  provided,  shall  be  deemed 
guilty  of  a  felony,  and  upon  conviction  shall  be  punished  by  imprison- 
ment in  the  State  penitentiary  for  any  length  of  time  not  less  than 
two  nor  more  than  ten  years.  (Art.  680,  Penal  Code.) 


CHAPTER  XVI. 

MUTUAL    FIRE,    LIGHTNING,    HAIL    AND   STORM    INSURANCE    COMPANIES — 
THEIR   REGULATION,    GOVERNMENT   AND   CONTROL. 

Incorporation  of — "Mutual"  Must  Be  in  Title. 

408.  Any  number  of  persons,  not  less  than  seven,  who  shall  be  resi- 
dent citizens  of  the  State  of  Texas,  may  form  and  incorporate  a  com- 
pany for  the  purpose  of  mutual  insurance  against  loss  or  damage  by 
fire,  lightning,  hail  and  storms  and  for  all  or  either  of  such  purposes; 
provided,  that  every  company  incorporated  under  the  provisions  of  this 
act  shall  embody  the  word  "mutual"  in  its  title,  which  shall  appear 
upon  the  first  page  of  every  policy  and  renewal  receipt.     (Sec.  1,  Chap. 
29,  33d  Leg.) 

Note. — Mutual  fire  insurance  companies  are  subject  to  the  General   Corpora- 
tion Laws  of  the  State.     (Opinion  of  Attorney  General,  September  9,  1916.) 

Application  for  Permit  to  Solicit  Insurance — Filing  Fee. 

409.  When  any  number  of  persons,  not  less  than  seven,  desire  to 
organize  a  mutual  insurance  company,  as  herein  provided,  they  shall 
make  application  to  the  Commissioner  of  Insurance  and  Banking  of  the 
State  of  Texas  for  permission  to  solicit  insurance  on  the  mutual  plan. 
Such  application  shall  contain: 

(1)  The  name  of  the  company,  and  the  name  selected  shall  not  be 
so  similar  to  that  of  any  other  insurance  company  as  to  be  likely  to 
mislead  the  public. 

(2)  The  locality  of  the  principal  business  office  of  such  company. 

(3)  The  kind  of  insurance  business  the  company  proposes  to  en- 
gage in. 

(4)  The  name  and  place  of  residence  of  not  less  than  seven  per- 
sons making  such  application  for  such  permit. 

(5)  An  affidavit  of  at  least  one  of  said  applicants,  stating  the  places 
of  residence  and  names  of  such  applicants  correctly. 

Upon  receipt  of  such  application,  together  with  a  fee  of  one  dollar, 


150  INSURANCE  LAWS  or  TEXAS. 

in  payment  for  filing  such  application,  the  Commissioner  of  Insurance 
and  Banking  shall  at  once  file  said  application,  and  issue  to  said  ap- 
plicant a  permit  authorizing  said  applicant  to  solicit  insurance  on  the 
mutual  plan,  in  accordance  with  the  terms  of  the  application,  but  not 
to  issue  policies  of  insurance.  (Sec.  2,  Chap.  29,  33d  Leg.) 

Conditions,  Etc.,  for  Obtaining  Charter,  Fees  and  Taxes. 

410.  No  such  company  shall  be  granted  a  charter,  or  be  authorized 
to  issue  policies  of  insurance,  until  insurance,  upon  not  less  than  one 
hundred  separate  risks,  the  total  amount  of  which  insurance  shall  be  not 
less  than  one  hundred  thousand  dollars,  has  been  applied  for  and  en- 
tered on  the  books  of  said  company,  and  until  an  amount  equal  to  not 
less  than  fifty  per  cent  of  the  first  premiums  for  such  insurance  has 
been  paid  in  cash  to  such  company,  a  premium  note  being  taken  for  the 
balance,  if  any,  and  such  mutual  annual  premiums  must  aggregate  not 
less  than  twice  the  maximum  liability  to  be  incurred  on  any  one  risk, 
and  no  policy  of  insurance  shall  be  written  or  liability,  as  an  insurer 
be  incurred,  by  said  company  until  a  statement  subscribed  and  sworn 
to  by  the  president  and  secretary  of  said  company,  stating  that  the 
above  provisions  have  been  complied  with,  has  been  filed  with  the  Com- 
missioner of  Insurance  and  Banking  of  the  State  of  Texas,  together 
with  certified  copies  of  the  company's  proposed  charter  and  by-laws. 

The  charter  or  articles  of  association  of  said  company  shall  be  signed 
and  acknowledged  by  at  least  four  of  the  original  applicants  for  said 
permits,  and  shall  contain : 

(1)  The  name  of  the  company. 

(2)  The  purpose  for  which  it  is  formed. 

(3)  The  place  or  places  where  its  business  is  to  be  transacted,  and 
the  location  of  its  principal  business  office. 

(4)  The  term  for  which  it  is  to  exist. 

(5)  The  number  of  its  directors,  or  trustees,  and  the  names  and 
residences  of  those  who  are  elected  for  the  first  year. 

When  said  applicants  have  complied  with  all  the  above  requirements, 
and  have  filed  the  necessary  copies  of  their  charter  and  by-laws  with 
the  Commissioner  of  Insurance  and  Banking  of  the  State  of  Texas,  and 
have  paid  the  fees  and  taxes  required  by  the  laws  of  the  State  of  Texas 
to  be  paid  the  Commissioner  of  Insurance  and  Banking  shall  record 
said  charter,  and  furnish  said  company  with  a  certified  copy  thereof, 
and  shall  issue  to  said  company  a  certificate  of  authority  showing  it 
has  complied  with  the  laws  of  the  State  of  Texas,  and  authorizing  it  to 
do  business  until  the  last  day  of  the  following  February.  (33d  Leg., 
Chap.  29,  Sec.  3.) 

Note. —  (1)  The  charter  of  a  mutual  fire  insurance  company  must  be  in 
accord  with  the  statute  prescribing  its  requisites;  must  show  the  number  of 
directors,  and  its  by-laws  on  the  same  subject  must  be  in  accord  with  the  num- 
ber of  directors  specified  in  its  charter.  (Opinion  of  Attorney  General,  April 
2,  1914.) 

(2)  A  mutual  fire  insurance  company,  organized  under  this  statute,  cannot 
amend  its  charter  so  as  to  authorize  it  to  do  any  other  kinds  of  insurance  than 
fire,  lightning,  hail  and  storm  mentioned  in  said  statute,  and  therefore  cannot 
avail  itself  of  the  provisions  of  Chapter  108,  Acts  of  the  Thirty -third  Legisla- 
ture (Section  170,  this  Digest)  which  refers  only  to  capital  stock  companies 
and  not  to  mutual  companies.  (Opinion  of  Attorney  General,  August  8,  1914.) 


INSURANCE  LAWS  OF  TEXAS.  151 

(3)  A  mutual  fire  insurance  company  must  have  not  less  than  seven  nor 
more  than  thirteen  directors;  its  charter  should  contain  some  formal  words 
showing  the  purpose  and  intention  of  the  incorporators  to  enter  into  a  con- 
tract. (Opinion  of  Attorney  General,  May  4,  1915.) 

Biennial  Examination  of  Mutual  Companies — Charter  Forfeited,  When. 

411.  Every  mutual  fire,  lightning  and  storm   insurance  company 
incorporated  in  this  State  shall  be  under  the  supervision  of  the  Com- 
missioner of  Insurance  and  Banking,  who  shall  make  or  cause  to  be 
made,  an  examination  of  the  affairs  of  each  mutual  insurance  company, 
at  the  company's  expense  at  least  once  in  every  two  years  and  at  such 
other  times  as  he  deems  proper,  and  he  shall  thoroughly  and  carefully 
inspect  books,  accounts  and  records  of  the  company,  and  if  upon  such 
inspection  the  affairs  of  such  company  are  found  to  be  in  a  sound  con- 
dition, and  the  company  thus  solvent  and  able  to  fulfill  its  obligations, 
he  shall  issue  to  the  company  a  certificate  showing  the  result  of  such 
examination.     If  upon  examination  he  is  of  opinion  that  the  mutual 
insurance  company  is  insolvent  or  has  exceeded  its  powers  or  has  failed 
to  comply  with  the  provisions  of  law  governing  it,  he  may  suspend  the 
company's  permit  and  shall  give  such  company  written  notice  of  that 
objected  to,  and  failing  such  being  remied    (remedied)   within  thirty 
days,  he  shall  report  the  same  to  the  Attorney  General,  who  shall  at 
once  bring  suit  to  forfeit  the  charter  of  such  company.      (33d  Leg., 
Chap.  29,  Sec.  4.) 

Annual  Statement  of  Company. 

412.  Every  mutual  insurance  company  transacting  business  in  the 
State  shall,  before  the  month  of  March  in  each  year,  file  in  the  office 
of  the  Commissioner  of  Insurance  a  statement  showing  the  exact  condi- 
tion of  affairs  of  the  company  upon  the  31st  day  of  December  preceding; 
such  statement  being  in  conformity  with  such  forms  as  the  Insurance 
Commissioner  may  furnish.     (Id.,  Sec.  5.) 

Who  Are  Members;  Their  Bight  to  Vote. 

413.  Every  person  to  whom  a  policy  of  insurance  has  been  issued 
by  a  mutual  company  incorporated  in  this  State  shall  be  a  member  of 
such  company  so  long  as  his  policy  remains  in  force  and  shall  be  en- 
titled to  one  vote  at  the  meetings  of  the  members  of  such  companies, 
and  shall  further  be  entitled  to  his  equitable  share  of  all  benefits  de- 
rived from  being  a  member  of  such  company.     (Id.,  Sec.  6.) 

Payment   of  Annual   Premium — Other  Liabilities   Assessable   at   the   Dis- 
cretion of  Whom. 

414.  The  by-laws  of  every  company  organized  under  this  act  shall 
provide  that  every  member,  in  addition  to  his  annual  premium  paid  in 
cash,  or  in  cash  and  premium  notes  shall  be  liable  for  a  sum  equal  to 
another  annual  premium ;  or  it  may  provide  a  sum  equal  to  three  or  five 
annual  premiums.     Such  additional  liability  being  assessable  at  the  dis- 
cretufn  of  the  Insurance  Commissioner  or  the  company's  board  of  di- 
rectors, for  the  member's  proportionate   share  of  losses  and  expenses 
should  the  company's  funds  become  impaired.     (Id.,  Sec.  7.) 


153  INSURANCE  LAWS  OF  TEXAS. 

Note. —  ( 1 )  The  members  or  policyholders  of  a  mutual  fire  insurance  com- 
pany are  not  responsible  for  the  debts  of  the  corporation  except  to  the  extent 
specified  in  this  chapter.  In  addition  to  one  annual  premium  the  statute  makes 
each  policyholder  liable  for  another  annual  premium.  This  liability  is  absolute 
and  can  neither  be  waived  or  avoided,  when  needed.  There  is  also  an  optional 
liability  which  must  be  stated  in  the  company's  by-laws;  that  is  the  additional 
liability  may  be  either  three  or  five  annual  premiums  if  it  is  so  stated  in  the 
by-laws.  This  additional  liability  can  only  be  used  to  pay  losses  and  expenses, 
and  is  assessable  at  the  direction  of  the  Insurance  Commissioner  or  by  the 
company's  board  of  directors,  when  needed.  The  insolvency  of  the  company 
does  not  terminate  the  obligation  of  the  policyholders  to  contribute  by  assess- 
ments to  pay  losses  incurred  prior  to  the  insolvency.  If  an  unearned  premium 
was  due  for  policy  cancelled  prior  to  insolvency  then  it  may  be  paid  out  of 
assessment  funds,  but  if  the  unearned  premium  is  simply  the  amount  unearned 
at  the  time  of  the  insolvency ;  then  it  may  not  be  paid  out  of  funds  collected 
by  assessment.  The  appointment  of  a  receiver  of  a  company  on  the  ground  of 
insolvency  cancels  outstanding  policies  and  subsequent  losses  are  not  liabilities 
which  may  be  enforced.  (Opinion  of  Attorney  General,  September  9,  1916.) 

(2)  Under  above  section  it  is  not  necessary  to  levy  the  assessment  for  an 
entire  annual  premium,  but  only  for  so  much  thereof  as  may  be  necessary.  The 
fact  that  one  assessment  has  been  made  during  the  year  will  not  preclude  sub- 
sequent assessments  so  long  as  the  total  amount  does  not  exceed  the  limitation 
provided  by  the  by-laws  of  the  company.  (Opinion  of  Attorney  General,  July 
20,  1917.) 

By-Laws  of  Company   Shall  Contain,  What — By-Laws  Form  Part  of  Con- 
tract With  the  Company. 

415.  The  by-laws  of  such  companies  shall  specifically  provide  for 
the  rules  and  regulations  of  the  government,  providing  for  the  collec- 
tion of  adequate  premiums  or  assessments,  either  all  in  cash  or  part 
cash  and  part  by  note,  such  premiums  being  based  upon  the  greater  or 
less  risk  attached  to  the  property  insured,  and  they  shall  state  clearly 
and  plainly  the  extent  of  each  member's  liability  to  other  members, 
shall  provide  for  the  accumulation  of  a  surplus  fund  to  which  shall  be 
added  not  less  than  ten  per  cent  of  the  annual  saving,  being  made  by 
the  company,  shall  require  (provide)  for  the  bonding  of  the  company's 
officers  and  shall  name  such  other  provisions  and  safeguards  as  may  be 
deemed  proper  and  not  contrary  to  the  laws  of  the  State,  and  a  notice 
in  heavy  type  shall  be  printed  on  all  policies  calling  to  the  attention 
of  the  insured  that  the  by-laws  are  a  part  of  his  contract  with  the  com- 
pany. (Id.,  Sec.  8.) 

Note. —  ( 1 )  The  by-laws  of  a  mutual  fire  insurance  company,  authorizing  an 
additional  assessment  upon  the  policyholders,  cannot  limit  such  assessment  to  the 
payment  of  losses,  but  must  permit  it  to  be  used  for  expenses  as  well.  Under 
such  by-laws  an  executive  committee  must  be  composed  of  members  of  the  board 
of  directors,  but  such  committee  cannot  be  substituted  for  or  take  the  place  of 
the  board,  and  the  duties  of  the  committee  must  be  limited  and  prescribed  by  the 
by-law.  The  board  of  directors  cannot  amend  the  by-laws  after  their  adoption 
by  the  policyholders,  but  all  such  amendments  must  be  made  under  authority 
of  the  policyholders  or  members  of  the  corporation.  Such  by-laws  filed  with  the 
charter  of  the  company  should  be  certified  to.  (Opinion  of  Attorney  General, 
June  27,  1913.) 

(2)  The  executive  committee  of  a  mutual  fire  insurance  company,  provMed  for 
in  the  by-laws  of  the  company,  must  be  members  of  the  company  and  of  the  board 
of  directors.  The  duties  of  such  committee  should  be  defined,  but  they  cannot 
be  made  to  embrace  the  general  management  of  the  company.  Such  general  man- 
agement must  be  by  and  through  the  board  of  directors.  (Opinion  of  Attorney 
General,  July  9,  1913.) 


INSURANCE  LAWS  OF  TEXAS.  15<'i 

(3)  The  board  of  directors  of  a  mutual  fire  insurance  company  cannot  law- 
fully transfer  all  their  powers  to  an  executive  committee,  and  the  by-laws  of  the 
company  should  not  attempt  to  do  so.     The  powers  and  duties  of  the  executive 
committee  should  be  limited  and  clearly  denned  in  the  by-laws,  and  in  such  a 
way  as  to  leave  the  actual  management  of  the  company  in  the  hands  of  the 
directors  and  not  with  the   committee.     The  by-laws   can   be  amended  only  by 
members  of  the  company  and  cannot  be  lawfully  amended  by  the  directors  only. 
(Opinion  of  Attorney  General,  September  19,  1913.) 

(4)  The  by-laws   of   a  mutual   fire   insurance  company   having   reference  to 
the   number   of   its   directors   must   be  in   accord   with    its   charter.     A    by-law, 
providing  for  the  levying  of  assessments,  should  follow  the  requirements  of  the 
statute,  and  should  not  conflict  with  it  nor  contain  provisions  not  authorized 
by  it.     It  is  contrary  to  the  statute  and  unlawful  for  such  by-laws  to  provide 
for  a  creation  of  a  reserve  fund  as  capital  of  a  mutual  company  which   shall 
belong  to  the  company  and  not  be  subject  to  distribution  or  division  among  the 
policyholders,  and  prohibiting  persons  who  have  ceased  to  be  policyholders  from 
having  an  interest  in  such  reserve  fund.     It  is  also  unlawful  for  them  to  provide 
that  at  the  dissolution  of  the  company  such  reserve  fund  shall  be  divided  among 
those  who  may  be  policyholders  at  the  time  of  the  dissolution.     Such  by-laws 
must  clearly  provide  for  the  collection  of  adequate  premiums  and  assessments 
based  upon  the  greater  or  less  risk  of  the  property  insured.     By-laws  cannot  be 
amended  by  the  directors  or  officers,  but  by  the  stockholders  who  in  a  mutual 
company  are  its  policyholders.      (Opinion  of  Attorney  General,  April  2,   1914.) 

(5)  By-laws  of  a  mutual  fire  insurance  company  attempting  to  provide  that 
officers  of  the  company  shall  hold  office  for  five  years  should  not  be  approved, 
because  contrary  to  the  law  which  requires  that  the  directors  of  a  corporation 
shall  be  elected  annually  and  shall  then  elect  the  officers  from  their  own  mem- 
bership.    Nor  should  by-laws  of  such  a  company  be  approved  if  they  provide 
that  the  secretary  shall  receive  for  his  services  and  all  other  expenses  of  the 
company  35  per  cent  of  the  premiums;  nor  if  the  attempt  to  exempt  the  officers 
and  directors  from  liability  for  the  obligations  of  the  company;  nor  if  they  at- 
tempt to  limit  the  place  where  suits  may  be  brought  against  the  company  to  a 
single  county;  nor  if  they  provide  that  the  policyholders  shall  participate  in  the 
profits  and  losses  of  the  company;  nor  if  they  attempt  to  give  the  officers  of  the 
company  power  to  make  rates  on  risks.     A  by-law  of  such  a   company  which 
provides  that  no  dividend  shall  be  declared  until  its  surplus  amounts  to  $100,000 
and  that  10  per  cent  of  the  annual  savings  shall  be  added  to  the  surplus,  should 
be  in  such  language  as  to  make  the  meaning  clear.      (Opinion  of  Attorney  Gen- 
eral, May  27,  1914.) 

(6)  The  by-laws  of  a  mutual  fire  insurance  company  must  be  in  harmony 
with  its  charter.    An  article  stating  the  name  of  the  company,  vesting  the  man- 
agement  in   the  board   of   directors   and   locating   the   principal    office,    are   not 
necessary  in  the  by-laws;  their  presence  there  is  merely  superfluous,  not  illegal. 
The  term  of  office  of  the  officers  should  be  fixed  by  the  by-laws.     The  by-laws 
as  an  original  proposition  are  to  be  adopted  by  the  board  of  directors,  but  after 
their  adoption  they  cannot  be  changed  except  by  vote*  of  the  policyholders  or 
members,  and  a  provision  to  the  effect  that  the  directors  shall  have  authority 
to  amend  the  by-laws  is  contrary  to  the  statutes  of  this  State.     An  article  of  the 
by-laws  of  such  a  company  limiting  the  purpose  for  which  an  additional  pre- 
mium or  assessment  may  be  collected  for  payment  of  loss   is  contrary  to  the 
statute.     When  assessed  by  legal   authority  such  additional   collection   must  be 
made  not  only  for  payment  of  loss  but  for  expense  as  well.     By-laws  limiting 
the  maximum  liability  to  be  assumed  on  any  one  fire  to  $1000  should  not  be 
approved.     By-laws   of   such    a    company   should   state   the   date   of   the   annual 
meeting  of  the  members,  provide  for  the  collection  of  premiums  either  in  cash 
or  part  cash,  such  premiums  to  be  based  upon  the  greater  or  less  risk  attached 
to  the  property  insured;   should  state  clearly  the  extent  of  each  member's  lia- 
bility to  other  members,  provide  for  the  accumulation  of  a  surplus  fund  to  which 
must  be  added  not  less  than  10  per  cent  of  the  annual  savings  of  the  company, 
and  for  the  bonding  the   officers   charged   with   handling   the    company's    funds. 
(Opinion  of  Attorney  General,  May  4,   1915.) 


154  INSURANCE  LAWS  OF  TEXAS. 

(7)  By-laws  of  a  mutual  fire  insurance  company  cannot  provide  that  a  mem- 
ber of  the  company  will  have  a  vote  for  each  policy  which  he  has  on  a  separate 
risk,  but  a  member  can  only  have  one  vote.  By-laws  of  such  company  which 
limit  the  collection  of  an  additional  premium  on  demand  of  board  of  directors 
are  too  restrictive.  The  surplus  of  a  mutual  company  cannot  be  limited  by 
the  by-laws.  Mutual  fire  insurance  companies  organized  under  the  laws  of  this 
State  are  subject  to  all  the  laws  governing  stock  fire  insurance  companies  where 
not  in  conflict  with  the  mutual  fire  insurance  laws.  Mutual  companies  are  sub- 
ject to  the  valued  policy  law  and  the  anti-technicality  law,  and  a  provision  in 
the  by-laws  providing  that  a  loss  under  a  policy  is  payable  contingent  on  the 
holder  having  paid  the  premium  thereon,  is  void.  The  by-laws  of  a  mutual  com- 
pany are,  under  the  statute,  a  part  of  its  policy  contract.  (Opinion  of  Attorney 
General,  August  7,  1916.) 

Investment  of  Funds. 

416.  Funds  of  mutual  companies  may  be  invested  in  United  States 
bonds,  Texas  State  bonds,  county  or  city  bonds  of  the  State  of  Texas, 
provided  that  such  bonds  are  issued  by  authority  of  law,  and  that  in- 
terest upon  them  has  never  been  defaulted,  or  in  first  mortgages  on  im- 
proved real  estate  within  the  State  where  the  first  mortgage  does  not 
exceed  fifty  per  cent  of  the  value  of  the  land  and  improvements  thereon. 
(Id.,  Sec.  9.) 

Expenses  of  Company  Limited   to   35   Per  Cent   of   Annual   Premiums — 
Statement. 

417.  The  expenses  of  all  companies  incorporated  under  this  act  must 
not  exceed  an  amount  equal  to  thirty-five  per  cent  of  the  annual  pre- 
miums, and  a  statement  must  be  made  annually  to  the  Commissioner 
of  Insurance  and  Banking  by  the  president  or  secretary  of  the  company 
that  they  are  being  so  limited.     (Id.,  Sec.  10.) 

Note. —  (1)  The  annual  premiums  mentioned  in  above  section  refer  to  gross 
annual  premiums  and  not  to  net  premiums.  (Opinion  of  Attorney  General, 
May  4,  1915.) 

(2)  Back  taxes  due  by  a  mutual  insurance  company  which  became  due  prior 
to  the  enactment  of  the  present  law,  and  taxes  on  real  estate  are  not  necessarily 
payable  out  of  the  35  per  cent  expense  fund  referred  to  in  this  Act,  but  may  be 
paid  out  of  the  income  of  the  company  from  sources  other  than  premium  receipts. 
(Opinion  of  Attorney  General,  July  23,  1917.) 

Reserve — Dividend. 

418.  In  determining  the  solvency  of  any  mutual  company,  organ- 
ized for  any  purpose  mentioned  in  this  act,  and  in   determining  the 
profit  or  saving  to  be  distributed  among  members  forty  per  cent  of  the 
actual  cash  premiums  paid  on  policies  in  force  for  one  year,  and  a  pro 
rata  of  all  premiums  received  on  risks  that  have  more  than  one  year  to 
run  shall  be  deemed  to  be  a  sufficient  reserve  under  the  said  policies, 
and  no  dividends  to  members  shall  be  paid  out  of  this  reserve.     (Id., 
Sec.  11.) 

Note. — In  determining  the  solvency  of  a  mutual  fire  insurance  company,  its 
liabilities  will  consist  of  all  its  debts,  including  policy  obligations  which  have 
been  adjusted  or  fixed  by  judgments  or  which  are  of  such  a  nature  that  the 
amount  has  been  determined  and  in  addition  thereto  the  pro  rata  of  unearned 
specified  in  above  Section  418.  The  assets  of  such  company  are  not  limited  to 
those  designated  as  "admitted  assets,"  but  the  value  of  the  entire  property  of 
the  company  of  every  kind  and  character  should  be  considered,  including  the 


INSURANCE  LAWS  OF  TEXAS.  155 

value  of  that  which  may  be  realized  from  assessment  prescribed  in  its  own  by- 
laws and  by  statute.  So  long  as  the  assets  of  the  company,  determined  as  just 
suggested,  exceed  its  liabilities,  as  just  defined,  the  company  would  not  be  in- 
solvent. (Opinion  of  Attorney  General,  March  29,  1918.) 

Special  Examination  of  Company,  When  Necessary. 

419.  If  any  time  the  admitted  assets  of  any  mutual  company,  oper- 
ating under  this  act,  shall  come  to  be  less  than  the  largest  single  risk 
for  which  the  company  is  liable,  then  the  president  and  the  secretary 
of  the  company  shall  at  once  notify  the  Commissioner  of  Insurance  and 
Banking,  and  he  may  make  an  examination  into  the  company's  affairs 
if  he  deems  it  best.     (Id.,  Sec.  12.) 

When  to  Suspend  or  Revoke  License — Forfeit  of  Charter. 

420.  If  upon  the  examination  of  the  company's  affairs,  as  required 
in  Section  12   (Sec.  419),  it  appear  that  the  largest  single  risk  for 
which  the  company  is  liable  exceeds  the  admitted  assets  of  the  com- 
pany, the  Commissioner  of  Insurance  and  Banking  shall  immediately 
suspend  or  revoke  the  license  of  the  company  until  the  assets  of  the 
company  are  increased  by  assessment  or  otherwise,  sufficiently  to  meet 
the  requirements. 

The  company  shall  have  thirty  days  within  which  to  meet  this  Ac- 
quirement, and  if  within  that  time  it  fails  to  do  so  the  Commissioner 
of  Insurance  and  Banking  shall  refer  the  matter  to  the  Attorney  Gen- 
eral of  the  State  of  Texas,  with  instructions  to  institute  proper  legal 
proceedings  to  forfeit  the  charter  of  said  company.  (Id.,  Sec.  13.) 

Note. — The  words  "admitted  assets,"  as  used  in  Sections  419  and  420  above, 
with  reference  to  the  largest  single  risk  exceeding  the  admitted  assets  of  the 
company,  mean  all  those  securities  of  the  company  which  are  defined  in  Section 
416  above,  and,  in  addition,  include  cash  and  policy  notes  authorized  and  per- 
mitted by  the  statutes,  and  generally  any  valid  obligation  due  the  company,  pro- 
vided always  that  such  assets  have  real  value.  However,  that  which  might  be 
realized  by  assessment  under  the  statute  and  under  the  by-laws  of  the  company 
would  not  be  considered  an  admitted  asset  for  the  purpose  of  determining 
whether  or  not  any  single  risk  exceeded  the  admitted  assets  of  the  company. 
The  fact  that  the  company  may  have  written  a  policy  in  excess  of  its  admitted 
assets  has  no  bearing  on  the  general  solvency  of  the  company.  Sections  419  and 
420  above  are  extra  conditions  imposed  upon  mutual  companies  and  may  not  be 
violated  without  incurring  the  possibility  of  forfeiture,  even  though  the  com- 
pany should  be,  under  the  general  corporation  laws,  comparatively  solvent. 
(Opinion  of  Attorney  General,  March  29,  1918.) 

Penalty  for  Failure  to  Keport  or  Make  False  Statement. 

421.  Failure  to  report  the  company's  condition  as  required  in  Sec- 
tion 12  of  this  act  shall  be  considered  a  misdemeanor,  punishable  by 
a  fine  of  not  less  than  one  hundred  dollars,  nor  more  than  five  hundred 
dollars  for  such  offense. 

The  intentional  submitting  of  a  false  statement,  or  the  intentional 
misappropriation  of  the  funds  of  mutual  companies,  shall  be  considered 
a  felony,  punishable  by  confinement  in  the  penitentiary  for  a  term  of 
years  not  less  than  five,  nor  more  then  ten  years  for  such  offense.  (Id., 
Sec.  14.) 


156  INSURANCE  LAWS  OF  TEXAS. 

Law   Governing   Stock   Fire   Insurance    Companies   Applicable   to    Mutual 
Companies. 

422.  Every  mutual  company  organized  for  any  purpose  mentioned 
in  this  act  shall  be  amenable  to,  and  subject  to  the  provisions  of  all 
laws  of  this  State  governing  stock  fire  insurance  companies,  in  so  far 
as  they  are  applicable  to  mutual  companies,,  and  not  in  conflict  with  the 
provisions  of  this  act.     (Id.,  Sec.  15.) 

Lfcense  or  Permit  Suspended,  When — Penalty  for  Violation  or  Failure  to 
Comply  With  Provisions  of  This  Act. 

423.  Any  mutual   company   that   shall  wilfully   violate,   or  fail   to 
comply  with  the  provisions  of  this  act,  shall  be  subject  to,  and  liable 
to  pay  a  penalty  of  not  less  than  five  dollars,  nor  more  than  one  hun- 
dred dollars  for  each  violation  thereof,  and  such  penalty  may  be  col- 
lected and  recovered  in  an  action  brought  in  the  name  of  the  State  of 
Texas  in  any  court  having  jurisdiction  thereof;  and  for  any  violation 
or  failure  to  comply  with  any  of  the  provisions  of  this  act  the  Commis- 
sioner of  Insurance  and  Banking  may  suspend  a  company's  permit,  or 
license,  and  while  suspended  such  company  shall  be  prohibited  from 
writing  or  renewing  any  insurance  policies.     (Id.,  Sec.  16.) 

Foreign  Mutual  Companies  Must  Have. 

424.  Mutual  companies  incorporated  under  the  laws  of  any  other 
State,  or  'foreign  government,  for  any,  or  all  of  the  purposes,  specified 
in  the  first  section  of  this  act,  and  duly  licensed  to  transact  business  in 
such  other  States  or  government,  and  that  have  not  less  than  one  hun- 
dred thousand  dollars  assets  in  excess  of  liabilities,  shall  when  they  have 
complied  with  the  requirements  and  restrictions  of  this  act,  as  far  as 
applicable  to  them,  be  admitted  to  do  business  in  this  State,  and  the 
Commissioner  of  Insurance  and  Banking  shall  issue  to  any  such  com- 
pany so  complying  a  permit  authorizing  such  company  to  do  business 
in  this  State  until  the  last  day  of  the  following  February.     (Id.,  Sec.  17.) 

Filing  Fees  and  Taxes. 

425.  Every  mutual  company  operating  under  this  act  shall  pay  to 
the  Commissioner  of  Insurance  and  Banking  of  the  State  of  Texas,  for 
obtaining  a  charter,  a  fee  of  twenty  dollars,  and  for  each  license  granted 
or  renewal  thereof,  a  fee  of  one  dollar,  and  for  filing  each  annual  state- 
ment, a  fee  of  ten  dollars  annually  on  the  31st  day  of  each  December, 
and  when  the  Insurance  Commissioner  has  certified   to  the  Treasurer 
of  the  State  of  Texas,  the  correct  amount  to  be  paid,  every  mutual  com- 
pany operating  under  this  act  shall  pay  to  the  Treasurer  of  the  State 
of  Texas  one-half  of  one  per  cent  of  all  the  net  premiums,  or  assess- 
ments, received  by  it  during  the  year,  and  no  other  tax  shall  be  required 
of  such  mutual  company  or  companies,  their  officers  and  agents,  except 
such  fees  as  shall  be  paid  to  the  Commissioner  of  Insurance  as  required 
by  law.     (Id.,  Sec.  18.) 

Withdrawal  of  Securities  on  Depositing  With  State  Treasurer  in  Accord- 
ance With  Repealed  Law,  B.   S.,  Art.  4909,  When, 

426.  Any    mutual    fire,  lightning    and    storm    insurance    company 
which  has  deposited  securities  with  the  State  Treasurer  of  the  State  of 


INSURANCE  LAWS  OF  TEXAS.  157 

Texas,  in  accordance  with  Chapter  10,  Title  71,  of  the  Revised  Statutes 
of  Texas  of  1911,  repealed  in  Section  20  of  this  act,  may  withdraw 
from  such  depository  any  securities  so  deposited  upon  filing  with  the 
Commissioner  of  Insurance  and  Banking  of  the  State  of  Texas  a  decla- 
ration of  its  intentions  to  comply  with  the  provisions  of  this  act,  and 
upon  the  execution  and  delivery  to  the  State  Treasury  of  the  State  of 
Texas  of  a  proper  receipt  for  such  securities,  which  receipt  shall  release 
the  State  Treasurer  from  all  further  liabilities  on  account  of  such  de- 
posit, or  the  withdrawal  thereof.  (Id.,  Sec.  19.) 

Repeal  of  Chapter  X,  Title  71,  B.  S.,  1011. 

427.  Chapter  10,  Title  71,  of  the  Revised  Statutes  of  the  State  of 
Texas  of  1911,  and  all  other  acts  or  laws,  or  parts  of  laws  in  conflict 
with  this  act,  or  in  conflict  with  any  portion  of  this  act  are  hereby  re- 
pealed, but  nothing  in  this  act  shall  be  deemed  to  apply  in  any  way  to 
the  present  law  governing  county  mutual  insurance,  or  farmers  mutuals, 
now  operating  under  lodge  systems,  or  printers  mutuals,  and  such  com- 
panies and  associations  shall  not  be  subject  to  the  provisions  of  this  act, 
except  that  they  will  make  annual  reports  to  the  Commissioner  of  In- 
surance and  Banking  of  the  State  of  Texas.  (Id.,  Sec.  20.) 


CHAPTER  XVIL 

MUTUAL   HAIL  INSURANCE   COMPANIES. 

Seven  or  More  Resident  Citizens  May  Form  Private  Corporation  for 
Mutual  Hail  Insurance— "Mutual"  Must  Be  in  Title. 

428.  Private  corporations  may  be  created  without  a  capital  stock 
within  this  State  by  the  voluntary  association  of  seven  or  more  persons, 
resident  citizens  of  this  State,  who  collectively  own  not  less  than  one 
thousand  acres  of  growing  crops  of  all  kinds  for  the  purpose  of  mutual 
insurance  against  loss  or  damage  by  hail ;  provided,  that  every  company 
incorporated  under  the  provisions  of  this  act  shall  embody  the  word 
"mutual"  in  its  title.     (Acts  33d  Leg.,  Chap.  22,  Sec.  1.) 

Must  Obtain  Permit  to  Solicit,  Stating  Name  and  Place  of  Company, 
Purpose  of  Organization — Amount  of  First  Assessment  to  Be  Levied 
on  Risk. 

429.  When  any  number  of  persons  not  less  than  seven  desire  to  or- 
ganize a  mutual  hail  insurance  company,  as  herein  provided,  they  shall 
make  application  to  the  Commissioner  of  Insurance  and  Banking  for 
permission  to  solicit  business  under  the  mutual  plan,  stating  the  prin- 
cipal place  of  business,  and  name  of  the  company;  that  said  company 
is  to  be  organized  for  the  insurance  of  growing  crops  against  loss  or 
damage  by  hail.     Upon  receipt  of  said  application  the  Commissioner" 
of  Insurance  and  Banking  shall  issue  said  applicants  a  permit  to  solicit 
insurance  against  loss  or  damage  by  hail  on  the  mutual  plan  in  accord- 
ance with  the  terms  of  the  application,  but  not  to  issue  policies  of  in- 
surance.    Said  mutual  company  shall  take  from  each  applicant  an  ob- 
ligation specifying  the  property  to  be  insured  and  the  amount  to  be 
paid,  as  the  first  assessment  evidenced  by  a  promissory  note  for  such 


158  INSURANCE  LAWS  OF  TEXAS. 

sum  and  payable  on  or  before  the  31st  day  of  the  succeeding  December 
and  upon  the  State  of  Texas  granting  to  said  mutual  insurance  com- 
pany a  charter  authorizing  it  to  do  business  in  this  State.  (Id.,  Sec.  2.) 

Conditions,  Etc.,  for  Obtaining-  Charter;  Fees. 

430.  When  applications  have  been  secured  for  insurance  with  such 
company  from  at  least  two  hundred  applicants,  residing  in  not  less  than 
twenty-five  different  counties  in  this  State,  the  first  assessment  or  pre- 
mium on  which  applications  shall  amount  to  at  least  ten  thousand  dol- 
lars for  which  notes  of  solvent  parties  founded  on  actual  bona  fide  ap- 
plications for  insurance  payable  upon  the  granting  a  charter  by  the 
State  to  said  mutual  hail  insurance  company,  which  premium  notes 
shall  be  a  lien  on  the  crop  insured  or  otherwise  secured  and  which  notes 
and  applications  shall  be  submitted  to  the  Commissioner  of  Insurance 
and  Banking,  and  when  he  finds  the  applications  and  notes  to  be  gen- 
uine and  secured  by  liens  on  growing  crops  or  otherwise  secured,  he  shall 
upon  the  payment  of  a  fee  of  twenty-five  dollars  certify  the  fact  that  he 
has  examined  and  approved  said  applications  and  notes  to  the  Secretary 
of  State,  who  shall  upon  an  application  of  said  persons  to  which  appli- 
cation shall  be  attached  the  said  certificate  of  the  Commissioner  of 
Insurance  and  Banking  permit  said  company  to  incorporate  and  issue 
to  it  a  charter.  A  certified  copy  of  the  charter  shall  thereupon  be  filed 
with  the  Commissioner  of  Insurance  and  Banking  who  upon  the  pay- 
ment of  the  fees  required  by  law  shall  issue  to  said  mutual  hail  insur- 
ance company  a  license  to  solicit  and  transact  business  and  issue  poli- 
cies against  loss  or  damage  by  hail.  Every  person  making  application 
for  insurance  in  such  company  prior  to  the  granting  of  a  charter  to 
such  company  and  signing  a  non-negotiable  promissory  note  shall  be 
liable  upon  the  note  upon  the  granting  of  a  charter  by  the  State,  and, 
if  payment  is  refused,  suit  may  be  brought  on  same  in  any  court  in 
this  State  having  jurisdiction  of  the  amount  at  the  principal  office  of 
said  insurance  company.  (Id.,  Sec.  3.) 

Note.  —  A  mutual  hail  insurance  company  that  has  ceased  to  transact  business, 
has  ceased  to  have  any  members,  and  has  ceased  to  exist,  except  in  so  far  as  its 
charter  has  not  been  forfeited,  must  comply  with  above  section  of  the  law  before 
being  licensed  to  again  transact  business.  (Opinion  of  Attorney  General,  May 
4,  1917.) 


Application  for  Charter  —  What  It  Shall 

431.  The  application  for  a  charter  shall  state  the  name  of  the  cor- 
poration, the  purpose  for  which  it  is  formed,  the  place  of  its  principal 
office,  the  term  for  which  it  is  to  exist,  the  number,  name  and  residence 
of  its  directors  for  the  first  year  and  shall  be  subscribed  and  acknowl- 
edged by  seven  or  more  of  the  applicants.     (Id.,  Sec.  4.) 

Organization  and  Qualifications  of  Oflacers  and  Directors. 

432.  Upon  the  issuance  of  a  charter  by  the  Secretary  of  State  to 
such  mutual  hail  insurance  company  the  persons  making  applications 
for  such  charter  shall  constitute  a  board  of  directors  for  the  first  year, 
which  board  of  directors  shall  consist  of  not  less  than  seven  persons,  all 
of  whom  shall  be  residents  of  this  State.     The  officers  of  such  company 
shall  be  such  as  may  be  provided  by  the  by-laws,  and  the  treasurer  or 


INSURANCE  LAWS  OF  TEXAS.  159 

the  secretary  and  treasurer,  if  such  offices  should  be  combined  in  one, 
shall  execute  a  bond  in  the  sum  of  ten  thousand  dollars  payable  to  the 
Commissioner  of  Insurance  and  Banking  and  his  successors  in  office, 
conditioned  for  the  faithful  performance  of  his  duties,  and  that  he  will 
account  for  all  moneys,  notes  or  other  assets  that  may  come  into  his 
hands,  said  bond  shall  be  signed  by  two  or  more  good  and  solvent  sure- 
ties or  be  executed  by  a  guaranty  company  authorized  to  do  business  in 
this  State,  and  shall  be  approved  by  the  Commissioner  of  Insurance  and 
Banking.  (Id.,  Sec.  5.) 

What  Policy  Shall   Contain — Bigger  Losses   Than  the  Sum   of  All   Pre- 
miums -Shall  Be  Paid  by  Proportionate  Shares. 

433.  Mutual  hail  insurance  companies  organized  under  the  provi- 
sions of  this  act  may  issue  policies   on  growing  crops   of   all   kinds 
against  loss  or  damage  by  hail  only.     Any  person  desiring  insurance  in 
such  company  shall  make  application  on  blanks  furnished  by  the  com- 
pany and  shall  pay  the  full  amount  of  the  premium  in  cash  or  secured 
notes.     Provided,  that  no  contract  shall  be  made  providing  for  payment 
of  any  obligation  by  the  insured  or  for  suit  on  any  such  obligation  of 
the  insured,  except  those  given  by  the  charter  members  referred  to  in 
Section  3  of  this  act,  in  any  county  other  than  the  county  in  which  the 
insured  has  his  domicile.     In  case  the  whole  amount  of  the  premium 
collected  by  such  company  for  any  one  year  shall  be  insufficient  to  pay 
all  losses  occurring  during  said  year,  after  paying  the  necessary  ex- 
penses for  said  year,  the  persons  insured  by  such  company  shall  receive 
their  proportionate  share  of  the  sums  realized  from  said  premiums  after 
deducting  the  expenses  therefrom,  in  full  satisfaction  of  their  losses, 
and  no  member  shall  be  liable  to  the  company  or  to  any  other  person 
for  more  than  the  premium  which  shall  be  paid  by  him  or  secured  to 
be  paid  by  him  in  making  hi&  application  for  insurance.     (Id.,  Sec.  6.) 

Fund  Set  Apart  for  Payment  of  Losses — Investment  of  Such  Fund — How 
Disposed  of. 

434.  All  companies  incorporated  under  this  act  shall  set  aside  sixty 
per  cent  of  all  premiums  collected  as  a  policyholders'   fund  for  the 
payment  of  losses,  which  fund  shall  be  used  for  no  other  purpose,  and 
the  remainder  of  the  gross  premiums  collected  shall  be  used,  if  needed, 
for  paying  the  expenses  of  said  company,  and  if  not  needed  for  such 
purpose,  such  remainder  not  so  used  shall  be  added  to -the  policyholders' 
fund  at  the  end  of  the  current  year,  and  if,  at  the  end  of  such  current 
year,  the  total  of  said  policyholders'  fund  has  not  been  appropriated  or 
necessary  in  the  payment  of  losses  to  policyholders,  then  such  amount 
of  said  fund  so  remaining  may  be  invested  in  first  mortgage  notes  on 
lands  in  this  State,  said  investment  not  exceeding  fifty  per  cent  of  the 
value  of  said  lands,  or  in  bonds  of  this  State,  or  in  county,  city,  town 
or  school  district  bonds  of  this  State;  provided,  said  bonds  have  been 
approved  by  the  Attorney  General,  which  funds  or  securities  shall  be 
deposited  in  trust  for  said  policyholders  with  any  bank  approved  by  the 
Commissioner  of  Insurance  and  Banking  as  a  reserve  fund,  which  fund 
may  be  used  for  the  payment  of  policyholders,  if  necessary,  in  case  of 
excessive  and  unprecedented  losses,  and  such  company  may  collect  and 


160  INSURANCE  LAWS  or  TEXAS. 

receive  the  interest  and  dividends  thereon  to  be  used  in  defraying  the 
expenses  and  paying  the  losses  of  said  company.     (Id.,  Sec.  7.) 

Note. — The  company  has  the  right  to  sell  real  estate  paper  in  which  its  sur- 
plus is  invested  to  pay  policyholders  when  necessary  account  of  unprecedented 
losses.  Commissioner  may  require  losses  to  be  paid  out  of  this  fund  to  be  sub- 
mitted to  him  for  approval  before  payment.  Commissioner  is  authorized  to 
designate  depository  for  the  funds  and  securities  of  the  company.  (Opinion  of 
Attorney  General,  October  18,  1915.) 

Bates  to  Be  Determined  and  Fixed. 

435.  The  board  of  directors  of  such  company   shall  have  the  au- 
thority to  fix  the  rates  to  be  charged  for  such  insurance,  and 'may  fix  at 
their  discretion  different  rates  for  different  sections  of  the  State  based 
upon  the  frequency  of  hail  storms  in  such  sections.     (Id.,  Sec.  8.) 

Annual  Statement  of  Companies. 

436.  Every   such   corporation   shall,  on  or  before   January   1st,   or 
within  thirty  days  thereafter,  each  year  make  and  file  with  the  Com- 
missioner of  Insurance  and  Banking  a  report  upon  blank  forms  to  be 
furnished  by  such  Commissioner,  which  report  shall  be  verified  by  the 
oath  of  the  secretary  of  such  corporation,  and  shall  show  the  number  of 
policies  issued  for  the  preceding  year,  the  number  and  amount  of  losses 
paid,  the  gross  amount  received  from  premiums,  the  amount  of  expenses 
paid,  and  the  amount  set  aside  or  invested  during  the  year  as  a  reserve 
fund,  if  any,  and  the  books,  records  and  documents  of  such  corporation 
shall  be  subject  to  the  inspection  and  examination  of  the  Attorney  Gen- 
eral or  the  Commissioner  of  Insurance  and  Banking.     (Id.,  Sec.  9.) 

Filing  Fees. 

437.  The  following  fees  shall  be  paid  by  companies  organized  under 
this  law:     In  addition  to  the  application  fee,  charter  fee,  to  the  Secre- 
tary of  State  when  charter  is  issued  $25.00,  annual  franchise  tax  of 
$50.00,  and  to  the  Commissioner  of  Insurance  and  Banking  for  filing 
annual   statement  $5.00,   certificate  of  authority* to   corporation  $1.00 
and  no  other  fees  shall  be  paid  by  said  companies.     (Id.,  Sec.  10.) 


CHAPTEE  XVIII. 

RECIPROCAL    OR    INTER-INSURANCE INDEMNITY    CONTRACTS AUTHORIZ- 
ING AND  REGULATING. 

Declaring-  Who  May  Exchange  Reciprocal  or  Inter-Insurance  Indemnity 
Contracts — Life  Insurance  Excepted. 

438.  That  individuals,  partnerships  and  corporations  of  this  State 
hereby  designated  subscribers  are  hereby  authorized  to  exchange  re- 
ciprocal or  inter-insurance  contracts  with  each  other,  or  with  individ- 
uals, partnerships  and  corporations  of  other  States  and  countries,  pro- 
viding indemnity  among  themselves  from  any  loss  which  may  be  in- 
sured against  under  other  provisions  of  the  laws,  excepting  life  insur- 
ance. (Acts  34th  Leg.,  Chapi  156,  Sec.  1.) 


INSURANCE  LAWS  OF  TEXAS.  161 

Attorney  in  Fact  May  Execute  for  Subscribers — Power  of  Attorney  Desig- 
nates His  Place  of  Office. 

439.  That  such  contracts  may  be  executed  by  a  duly  appointed  at- 
torney in  fact  duly  authorized  and  acting  for  such  subscribers.     The 
office  or  offices  of  such  attorney  may  be  maintained  at  such  place  or 
places  as  may  be  designated  by  the  subscribers  in  the  power  of  attorney. 
(Acts  34th  Leg.,  Chap.  156,  Sec.  2.) 

Requisites  of  Declaration  to  Be  Filed  by  Attorney. 

440.  That  such  subscribers,  so  contracting  among  themselves,  shall, 
through  their  attorney,  file  with  the  Insurance  Commissioner  of  this 
State  a  declaration  verified  by  the  oath  of  such  attorney  setting  forth: 

(a)  The  name  or  the  title  of  the  office  at  which  such  subscribers 
propose  to  exchange  such  indemnity  contracts.    Said  name  or  title  shall 
not  be  so  similar  to  any  other  name  or  title  previously  adopted  by  a 
similar  organization,  or  by  any  insurance  corporation  or  association, 
as  in  the  opinion  of  the  Insurance  Commissioner  is  calculated  to  result 
in  confusion  or  deception.     The  office  or  offices  through  which  such  in- 
demnity contracts  shall  be  exchanged  shall  be  classified  as  reciprocal  or 
inter-insurance  exchanges. 

(b)  The  kind  or  kinds  of  insurance  to  be  effected  or  exchanged. 

(c)  A  copy  of  the  form  of  policy,  contract  or  agreement  under  or 
by  which  such  insurance  is  to  be  effected  or  exchanged. 

Note. — No  duty  devolves  upon  the  Commissioner  of  Insurance  and  Banking 
either  to  approve  or  disapprove  a  policy  issued  by  a  reciprocal  exchange.  (Opin- 
ion of  Attorney  General,  June  12,  1919.) 

(d)  A  copy  of  the  form  of  power  of  attorney  or  authority  of  such 
attorney  under  which  such  insurance  is  to  be  effected  or  exchanged. 

(e)  The  location  of  the  office  or  offices  from  which  such  contracts 
or  agreements  are  to  be  issued. 

(f)  That  applications  have  been  made  for  indemnity  upon  at  least 
seventy-five  separate  risks,  aggregating  not  less  than  one-half  million 
dollars  as  represented  by  executed  contracts  or  bona  fide  applications 
to  become  concurrently  effective,  or  in  case  of  liability  or  compensation 
insurance,  covering  a  total  payroll  of  not  less  than  two  thousand  em- 
ployes. 

(g)  That  there  is  on  deposit  with  some  State  or  national  bank  as 
a  depository  for  the  payment  of  losses  not  less  than  the  sum  of  ten 
thousand  dollars.     (Acts  34th  Leg.,  Chap.  156,  Sec.  3.) 

Shall  File  Instrument  Designating  Commissioner  as  Attorney  for  Serv- 
ice— How  Service  Is  Made. 

441.  That  concurrently  with  the  filing  of  the  declaration  provided 
for  by  the  terms  of  Section  3  hereof,  the  attorney  shall  file  with  the 
Insurance  Commissioner  an  instrument  in  writing,  executed  by  him 
for  said  subscribers,  conditioned  that,  upon  the  issuance  of  certificates 
of  authority  provided  for  in  Section  10  hereof,  service  of  process  may 
be  had  upon  the  Insurance  Commissioner  in  all  suits  in  this   State 
arising  out  of   such  policies,  contracts   or  agreements,   which   service 
shall  be  valid  and  binding  upon  all  subscribers  exchanging  at  any  time 
reciprocal  or  inter-insurance  contracts  through  such  attorney.     Three 
copies  of  such  process  shall  be  served,  and  the  Insurance  Commissioner 


162  INSURANCE  LAWS  OF  TEXAS. 

shall  file  one  copy,  forward  one  copy  to  said  attorney,  and  return  one 
copy  with  his  admission  of  service.     (Acts  34th  Leg.,  Chap.  156,  Sec.  4.) 

Attorney  Shall  File  Statement  Under  Oath  Showing  Maximum  Indem- 
nity Upon  Any  Single  Bisk — Also  as  to  Single  Bisk  of  Any  Sub- 
scriber Shall  Not  Be  Greater  Than  10  Per  Cent  of  His  Net  Worth. 

442.  That  there  shall  be  filed  with  the  Insurance  Commissioner  of 
this  State  by  such  attorney  a  statement  under  the  oath  of  such  attorney 
showing  the  maximum  amount  of  indemnity  upon  any  single  risk,  and 
such  attorney  shall,  whenever  and  as  often  as  the  same  shall  be  re- 
quired, file  with  the  Insurance  Commissioner  a  statement  verified  by 
his  oath  to  the  effect  that  he  has  examined  the  commercial  rating  of 
such  subscribers  as  shown  by  the  reference  book  of  a  commercial  agency 
having  at  least  one  hundred  thousand  subscribers,  and  that  from  such 
examination  or  from  other  information  in  his  possession  it  appears 
that  no  subscriber  has  assumed  on  any  single  risk  an  amount  greater 
than  10  per  cent  of  the  net  worth  of  such  subscriber.     (Acts  34th  Leg., 
Chap.  156,  Sec.  5.) 

Reserve  to  Be  Maintained. 

443.  That  there  shall  at  all  times  be  maintained  as  a  reserve  a  sum 
in  cash  or  convertible  securities  equal  to  50  per  cent  of  the  aggregate 
net  annual  deposits  collected  and  credited  to  the  accounts  of  the  sub- 
scribers on  policies  having  one  year  or  less  to  run  and  pro  rata  on  those 
for  longer  periods.     For  the  purpose  of  said  reserve,  net  annual  de- 
posits shall  be  construed  to  mean  the  advance  payments  of  subscribers 
after   deducting  therefrom   the   amounts    specifically   provided   in   the 
subscribers'  agreements  for  expenses  and  reinsurance.     Said  sum  shall 
at  no  time  be  less  than  ten  thousand  dollars,  and  if  at  any  time  50 
per  cent  of  the  aggregate  deposits  so  collected  and  credited  shall  not 
equal  that  amount,  then  the  subscribers,  or  their  attorney  for  them, 
shall  make  up  any  deficiency.     (Acts  34th  Leg.,  Chap.  156,  Sec.  6.) 

Attorney  Shall  Make  Annual  Beports  and  Furnish  Additional  Informa- 
tion— Shall  Be  Subject  to  Examination. 

444.  That  such  attorney  shall  make  an  annual  report  to  the  Insur- 
ance Commissioner  for  each  calendar  year,  which  report  shall  be  made 
on  or  before  March  the  1st  for  the  previous  calendar  year  ending  De- 
cember 31,  showing  that  the  financial  condition  of  affairs  at  the  office 
where  such  contracts  are  issued  is  in  accordance  with  the  standard  of 
solvency  provided  for  herein,  and  shall  furnish  such  additional  infor- 
mation and  reports  as  may  be  required  to  show  the  total  premiums  or 
deposits  collected,  the  total  losses  paid,  the  total  amounts  returned  to 
subscribers,  and  the  amounts  retained  for  expenses;  provided,  however, 
that  such  attorney  shall  not  be  required  to  furnish  the  names  and 
addresses  of  any  subscribers.     The  business  affairs  and  assets  of  said 
reciprocal  or  inter-insurance  exchanges,  as  shown  at  the  office  of  the 
attorney  thereof,  shall  be  subject  to  examination  by  the  Insurance  Com- 
missioner.    (Acts  34th  Leg.,  Chap.  156,  Sec.  7.) 

All  Corporations  Authorized  to  Exchange  Indemnity  Contracts. 

445.  That  any  corporation  now  or  hereafter  organized  under  the 


INSURANCE  LAWS  OF  TEXAS.  163 

laws  of  this  State  shall,  in  addition  to  the  rights,  powers  and  fran- 
chises specified  in  its  articles  of  incorporation,  have  full  power  and 
authority  to  exchange  insurance  contracts  of  the  kind  and  character 
herein  mentioned.  The  right  to  exchange  such  contracts  is  hereby  de- 
clared to  be  incidental  to  the  purposes  for  which  such  corporations  are 
organized  and  as  much  granted  as  the  rights  and  powers  expressly  con- 
ferred. (Acts  34th  Leg.,  Chap.  156,  Sec.  8.) 

Attorney  Prohibited  From  Exchanging  Contracts,  or  Soliciting  for  or 
Negotiating  Applications  for  Same,  Without  Complying  With  This 
Act,  Under  Penalty. 

446.  That  any  attorney  who  shall,  except  for  the  purpose  of  apply- 
ing for  certificate  of  authority  as  herein  provided,  exchange  any  con- 
tract of  indemnity  of  the  kind  and  character  specified  in  this  act,  or 
directly  or  indirectly  solicit  or  negotiate   any   application   for  same, 
without  first  complying  with  the  foregoing  provisions,  shall  be  deemed 
guilty  of  a  misdemeanor,  and  upon  conviction  thereof  shall  be  subjected 
to  a  fine  of  not  less  than  one  hundred  dollars  nor  more  than  one  thou- 
sand dollars.     (Acts  34th  Leg.,  Chap.  156,  Sec.  9.) 

Attorney  Must  Annually  Procure  Certificate  of  Authority  From  Com- 
missioner, Who  May  Revoke  or  Suspend  Same. 

447.  That  each  attorney  by  whom  or  through  whom  are  issued  any 
policies  of  or  contracts  for  indemnity  of  the  character  referred  to  in 
this  act  shall  procure  from  the  Insurance   Commissioner  annually  a 
certificate  of  authority,  stating  that  all  of  the  requirements  of  this  act 
have  been  complied  with,  and  upon  such  compliance  and  the  payment 
of  the  fees  required  by  this   act,  the  Insurance   Commissioner  shall 
issue  such  certificate  of  authority.     The  Insurance  -Commissioner  may 
revoke  or  suspend  any  certificate  of  authority  issued  hereunder  in  case 
of  breach  of  any  of  the  conditions  imposed  by  this  act  after  reasonable 
notice  has  been  given  said  attorney,  in  writing,  so  that  he  may  appear 
and  show  cause  why  action  should  not  be  taken.     Any  attorney  who 
may  have  procured  a  certificate  of  authority  hereunder  shall  renew  same 
annually  thereafter;  provided,  however,  that  any  certificate  of  authority 
shall  continue  in  full  force  and  effect  until  the  new  certificate  of  au- 
thority is  issued  or  specifically  refused.     (Acts  34th  Leg.,  Chap.  156, 
Sec.  10.) 

• 

License  Fee. 

448.  That  such  attorney  shall  pay  as  a  fee  for  the  issuance  of  the 
certificate  of  authority  herein  provided  for  the  sum  of  twenty  dollars, 
which  shall  be  in  lieu  of  all  license  fees  and  taxes  of  whatsoever  char- 
acter in  this  State.     (Acts  34th  Leg.,  Chap.  156,  Sec.  11.) 

Insurance  Laws  Do  Not  Apply  to  Exchange  of  Indemnity  Contracts. 

449.  That  except  as  herein  provided  no  insurance  law  of  this  State 
shall  apply  to  the  exchange  of  such  indemnity  contracts  unless  they  are 
specifically  mentioned.     (Acts  34th  Leg.,  Chap.  156,  Sec.  12.) 


164  INSURANCE  LAWS  OF  TEXAS. 

Repealing  Chapter  109,  General  Laws,  Thirty-third  Legislature. 

450.  That  Chapter  109,  General  Laws  of  the  State  of  Texas,  passed 
at  the  Eegular  Session  of  the  Thirty-third  Legislature,  be  and  the  same 
is  hereby  repealed,  and  all  other  laws  and  parts  of  laws  in  conflict  with 
this  act  are  hereby  repealed.  (Acts  34th  Leg.,  Chap.  156,  Sec.  13.) 


CHAPTER  XIX. 

PRINTERS'  AND  COUNTY  MUTUAL  FIRE  AND  STORM  INSURANCE  ASSO- 
CIATIONS. 

Printers'  Mutual  Fire  and  Storm  Insurance  Associations — Three  or  More 
Persons  to  Organize — No  Capital  Stock. 

451.  Private  corporations  may  be  created  within  this  State  by  the 
voluntary  association  of  three  or  more  persons  for  the  organization  of 
printers'  mutual  fire  and  storm  insurance  associations  without  an  au- 
thorized or  subscribed  capital  stock;  and  for  the  purpose  of  insuring 
against  loss  by  fire  or  storm,  only  such  property  as  may  be  owned  and 
operated  for  the  purpose  of  publishing  daily,  weekly  or  other  periodi- 
cal newspapers,  or  such  as  may  be  incident  thereto,  or  conducting  job 
printing  offices.     (E.  S.,  Art.  4919.) 

Must  Have  Certificate  of  Authority,  Make  Reports  and  Pay  Certain  Fees. 

452.  Before  beginning  operations  the  company  provided  for  in  this 
chapter  must  obtain  from  the  Commissioner  of  Insurance  and  Banking 
a  certificate  of  authority  such  as  is  issued  to  mutual  fire  and  tornado  in- 
surance companies  doing  business  in  this  State,  first  making  a  showing 
to  said  Commissioner  that  the  company  has  fully  complied  with  all  the 
requirements  of  law  applicable  to  such  mutual  fire  and  tornado  insur- 
ance companies;  provided,  that  no  officers  of  printers'  mutual  fire  and 
storm  insurance  associations  shall  be  required  to  give  bond  except  the 
treasurers  thereof,  who  shall  annually  file  a  bond  with  good  securities 
and  in  amount  to  be  approved  by  said  Commissioner.      (E.   S.,  Art. 
4920.) 

Shall  Report  Annually. 

453.  All  printers'  mutual  fire  and  storm  insurance  associations  which 
transact  business  in  only  one  county  shall  report  annually  on  or  before 
the  last  day  of  February  to  said  Commissioner  on  blanks  prepared  by 
him  and  pay  to  said  Commissioner  as  a  fee  for  filing  the  same  the  sum 
of  $5.00,  and  such  association  shall  not  be  required  to  pay  the  annual 
franchise  tax  collected  of  other  corporations  under  the  laws  of  this  State. 
(E.  S.,  Art.  4921.) 


INSURANCE  LAWS  OF  TEXAS.  165 

CHAPTER  XX. 

MUTUAL  PLAN  OF  INSURANCE  AGAINST  LOSS  OR  DAMAGE  RESULTING  FROM 
BURGLARY,  ROBBERY,  AND  LOSS  OF  MONEY  AND  SECURITIES 

IN  TRANSPORTATION. 
Shall  Be  Authorized. 

•  454.  Any  insurance  company  organized  and  incorporated  on  the 
mutual  plan,  under  the  laws  of  this  State  or  any  other  State,  for  the 
purpose  of  insuring  against  loss  or  damage  resulting  from  burglary 
and  robbery,  or  any  attempt  thereat,  and  securing  against  the  loss  of 
money  and  securities  in  course  of  transportation,  when  shipped  by  reg- 
istered mail,  shall  be  authorized,  admitted  and  licensed  to  do  business 
in  this  State,  as  provided  in  this  chapter.  (R.  S.,  Art.  4922.) 

Certain  Conditions — Premium  Contracts  to  Constitute  Part  of  the  Assets. 

455.  Before  any  such  company  shall  be  authorized  to  transact  busi- 
ness in  this  State,  except  to  solicit  and  receive  applications  for  insur- 
ance and  portions  of  premiums  thereon,  as  hereinafter  provided,  it  shall 
have  in  force  five  hundred  (500)   or  more  policies  on  which  the  pre- 
miums shall  have  been  paid  in  cash,  or  shall  be  evidenced  by  the  writ- 
ten contracts  of  the  policyholders,  on  which  not  less  than  one-fifth  of 
the  amount  shall  have  been  paid  in  cash,  and  the  cash  and  contracts 
for  premiums  shall  amount  in  the  aggregate  to  a  sum  of  not  less  than 
one  hundred  thousand  ($100,000)  dollars.     The  premium  contracts  so 
held  shall  constitute  a  part  of  the  assets  of  the  company.     (R.  S.,  Art. 
4923.) 

Must  File  Copy  of  Charter,  Articles  of  Incorporation,  Statement  Which 
Must  Show  Assets,  Liabilities,  Receipts  and  Disbursements,  Etc. — 
Impaired  Reserve. 

456.  And  every  such  company,  association  or  partnership  shall  also 
file  a  certified  copy  of  its  charter,  articles  of  incorporation  or  deed  of 
settlement,  together  with  a  statement  under  the  oath  of  the  president 
or  vice-president  and  secretary  of  the  company  for  which  he  or  they 
may  act,  stating  the  name  of  the  company  and  the  place  where  located, 
a  detailed  statement  of  its  assets,  showing  the  number  of  policyholders, 
aggregate  amount  of  premium  contracts,  the  amount  of  cash  on  hand, 
in  bank,  or  in  the  hands  of  agents,  the  amount  of  real  estate,  and  how 
the  same  is  encumbered  by  mortgage,  the  number  of  shares  of  stock 
of  every  kind  owned  by  the  company,  the  par  and  market  value  of 
the  same,  amount  loaned  on  bond  and  mortgage,  the  amount  loaned 
on  other  securities,  stating  the  kind  and  the  amount  loaned  on  each, 
and  the  estimated  value  of  the  whole  amount  of  such  securities  and 
other  assets  or  property  of  the   company,   also   stating  the   indebted- 
ness of  the  company,  the  amount  of  losses  adjusted  and  unpaid,  the 
amount  incurred  and  in  process  of  adjustment,  the  amount  resisted  by 
the  company  as  illegal  and  fraudulent,  and  all  other  claims  existing 
against  the  company;  and  for  a  company  organized  under  the  laws  of 
any  other  State,  a  copy  of  the  last  annual  report,  if  any,  made  under 
any  law  of  the  State  by  which  such  company  was  incorporated;  and 
no  agent  shall  be  allowed  to  transact  business  for  any  such  company 


166  INSURANCE  LAWS  OF  TEXAS. 

whose  reinsurance  reserve,  as  required  in  this  act,  is  impaired  to  the 
extent  of  twenty  per  cent  thereof,  while  such  deficiency  shall  continue. 
Nor  shall  it  be  lawful  for  any  agent  or  agents  to  act  for  any  company 
or  companies  referred  to  in  this  act,  directly  or  indirectly,  in  taking 
risks  or  transacting  the  business  of  burglary  and  robbery  insurance,  or 
the  insuring  of  the  safe  shipping  of  money  and  securities  by  registered 
mail  in  this  State,  without  procuring  from  the  Insurance  Commissioner 
a  certificate  of  authority,  stating  that  such  company  has  complied  with 
all  the  requirements  of  this  chapter  which  apply  to  such  companies,  and 
as  to  companies  organized  under  the  laws  of  any  other  State  there  shall 
foe  added  the  name  of  the  attorney  appointed  to  act  for  the  company. 
(R.  S.,  Art.  4924.) 

ILine  of  Business  Must  Be  Confined — Must  Set  Aside  a  Reinsurance  Re- 
serve of  50  Per  Cent. 

457.  Any  company  organized,  admitted  and  licensed  to  transact  busi- 
ness in  this  State  under  this  chapter,  shall  confine  its  line  of  business 
to  that  stated  in  the  first  section  of  this  chapter,  and  shall  confine  its 
business  in  this  State  to  banks,  bankers,  loan  companies  and  county 
treasurers,  and  shall  not  issue  any  policy  or  policies  to  any  person,  firm 
or  corporation  in  this  State  other  than  banks,  bankers,  loan  companies 
and  county  treasurers.     Every   such   company   shall   set  aside   a   rein- 
surance reserve  of  fifty  per  cent  of  its  premiums,  whether  collected  in 
cash  or  represented  by  obligations  of  the  policyholders,  as  written  in 
its  policies.     (E.  S.,  Art.  4924.) 

Policyholders. 

458.  Policyholders  of  any  company  organized  and  admitted  to  trans- 
act business  in  this   State  under  this  chapter,  shall  be  held  liable  to 
pay  the  membership  fee  and  premium  on  their  insurance  as  paid  or 
contracted  to  be  paid  at  the  time  the  policy  is  taken  out,  and  shall  not 
be  held  liable  for  any  further  or  other  assessments  or  claims  on  the 
part  of  the  company  or  its  policyholders.     The  membership  fees  and 
premiums  agreed  upon  may  be  collected  in  cash  at  the  time  the  policy 
is  issued  or  evidenced  by  a  written  obligation  of  the  policyholder  as 
may  be  agreed  upon  by  the  company  and  the  policyholder.     Such  pay- 
ment or  obligation  shall  be  the  limit  of  the  liability  of  the  policy- 
holder  to  the  company  for  premium  on  their  insurance.     (R.  S.,  Art. 
4925.) 

IVtust   Appoint  Insurance   Commissioner   on   Whom   Process    of   Law   Can 
Be  Served. 

459.  It  shall  not  be  lawful  for  any  insurance  company,  association 
or  partnership   incorporated  by  or  organized  under  the  laws  of  any 
other  State  of  the  United  States  for  any  of  the  purposes  specified  in 
this  act,  directly  or  indirectly,  to  take  risks  or  transact  any  business 
of  insurance  in  this  State  by  any  agent  or  agents  in  this  State,  until 
it  shall  first  appoint  an  attorney  in  this  State,  who  shall  be  the  Com- 
missioner of  Insurance  and  Banking,  on  whom  process  of  law  can  be 
served,  and  file  in  the  office  of  the   Commissioner  of  Insurance   and 
Banking  a  written  instrument  duly  signed  and  sealed,  certifying  such 
appointment,  and  any  process  issued  by  any  court  of  record  in  this 


INSURANCE  LAWS  OF  TEXAS.  167 

State,  and  served  upon  such  attorney  by  the  proper  officer  of  the  county 
in  which  such  attorney  may  reside  or  be  found,  shall  be  deemed  a 
sufficient  service  of  the  process  upon  said  company,  but  service  of  process 
upon  such  company  may  also  be  made  in  any  other  manner  provided 
by  law.  (R.  S.,  Art.  4926.) 

Statement  to  Be  Submitted  and  License  Issued  Annually. 

460.  -The  statement  and  evidence  of  new  membership,  assets  and 
investments  required  by  Article  4924  (Sec.  456),  of  this  chapter  shall 
be  renewed  from  year  to  year  in  such  manner  and  form  as  may  be 
required  by  said  Insurance  Commissioner,  with  an  additional  statement 
of  the   amount  of  premiums  received  in  this   State   during  the  pre- 
ceding year,  so  long  as  such  agency  continues,  and  the  said  Insurance 
Commissioner,  on  being  satisfied  that  the  membership,  assets,  securities- 
and  investments  remain  secure,  as  hereinbefore  mentioned,  shall  furnish 
a  renewal  of  the  certificate  as  aforesaid.     (E.  S.,  Art.  4927.) 

Must  Pay  an  Annual  Occupation  Tax  of  $50,  and  2  Per  Cent  on  Gash: 
Collected  on  Premiums. 

461.  All   companies   organized,   authorized,   admitted   and   licensed 
under  this  act  shall  pay  an  annual  occupation  tax  of  fifty  dollars  on 
filing  their  annual  statement,  and  a  tax  of  two  per  cent  on  the  cash 
collected  as  premiums  during  the  preceding  year  from  policyholders 
residing  in  Texas,  which  shall  be  in  lieu  of  all  other  taxes  or  fees; 
provided,  this  shall  not  exempt  from  the  payment  of  charter  or  per- 
mit fees  or  ad  valorem  taxes.     (Sec.  8,  Chap.  72,  General  Laws,  26th 
Leg.) 

Note. — The  above  section  (461)  has  probably  been  repealed  by  Section  2,  Chap- 
ter 108,  Acts  Thirty-second  Legislature,  which  is  Section  279  of  this  Digest. 


CHAPTER  XXI. 

AGENTS — DEFINITIONS  OF — LICENSE — POWERS — RESTRICTIONS — 

PENALTIES. 

Must  Have  Certificate  of  Authority. 

462.  It  shall  not  be  lawful  for  any  person  to  act  within  this  State 
as  agent  or  otherwise  in  soliciting  or  receiving  applications  for  insur- 
ance of  any  kind  whatever,  or  in  any  manner  to  aid  in  the  transaction 
of  the  business  of  any  insurance  company  incorporated  in  this  State 
or  out  of  it,  without  first  procuring  a  certificate  of  authority  from  the 
Commissioner  of  Insurance  and  Banking.     (E.  S.,  Art.  4960.) 

Penalty  for  Agent  Doing  Business  Without  Authority. 

463.  If  any  person  shall  transact  the  business  of  life,  fire  or  marine 
insurance  in  this  State,  either  as  agent,  solicitor  or  broker,  without  his 
or  the  company  or  association  which  he  represents,  first  obtaining  a 
certificate  of  authority  therefor  from  the  Commissioner  of  Insurance 
and  Banking,  he  shall  be  punished  by  fine  not  less  than  five  hundred 
nor  more   than   one   thousand    dollars,   and   by   imprisonment   in    the 


168  INSURANCE  LAWS  OF  TEXAS. 

county  jail  not  less  than  three  nor  more  than  six  months.      (P.   C., 
Art.  642.) 

Penalty  for  Any  Violation  of  Insurance  Laws. 

464.  If  any  person  shall  violate  any  provision  of  the  laws  of  this 
State  regulating  the  business  of  life,  fire  or  marine  insurance,  he  shall 
be  punished  by  fine  not  less  than  five  hundred  nor  more   than   one 
thousand  dollars.     (P.  C.,  Art.  643.) 

Who  Are  Insurance  Agents. 

465.  Any  person  who  solicits  insurance  on  behalf  of  any  insurance 
company,  whether  incorporated  under  the  laws  of  this  or  any  other 
State  or  foreign  government,   or  who   takes  or  transmits   other  than 
for  himself  any  application  for  insurance,  or  any  policy  of  insurance, 
to  or  from  such  company,  or  who  advertises  or  otherwise  gives  notice 
that  he  will  receive  or  transmit  the  same,  or  shall  receive  or  deliver 
a  policy  of  insurance  of  any  such  company,  or  who  shall  examine  or 
inspect  any  risk,  or  receive   or  collect  or  transmit  any  premium   of 
insurance  or  make  or  forward  any  diagram  of  any  building  or  build- 
ings, or  do  or  perform  any  other  act  or  thing  in  the  making  or  con- 
summating of  any  contract  of  insurance  for  or  with  any  such  insur- 
ance company  other  than  for  himself,  or  who  shall  examine  into  or 
adjust  or  aid  in  adjusting  any  loss  for  or  on  behalf  of  any  such  in- 
surance company,  whether  any  of  such  acts  shall  be  done  at  the  in- 
stance or  request  or  by  the  employment  of  such  insurance  company, 
or  of  or  by  any  broker  or  other  person,  shall  be  held  to  be  the  agent 
of  the  company  for  which  the  act  is  done  or  the  risk  is  taken,  as  far 
as  relates  to  all  the  liabilities,  duties,  requirements  and  penalties  set 
forth  in  this  act;  provided,  that  the  provisions  of  this  act  shall  not 
apply  to   citizens   of  this   State  who   arbitrate   in  the  adjustment  of 
losses  between  the  insurers  and  the  assured,  nor  to  the  adjustment  of 
particular  or  general  average  losses  of  vessels  or  cargoes  by  marine  ad- 
justers who  have  paid  an  occupation  tax  of  two  hundred  dollars  for 
the  year  in  which  the  adjustment  is  made;  provided  further,  that  the 
provisions  of  this  chapter  shall  not  apply  to  practicing  attorneys  at  law 
in  the  State  of  Texas  acting  in  the  regular  transaction  of  their  busi- 
ness as  such  attorneys  at  law,  and  who  are  not  local  agents  nor  acting 
as  adjusters  for  any  insurance  company.     (P.  C.,  Art.  644,  and  E.  S., 
Art.  4961.) 

Note. —  (1)  Individuals  only  may  become  agents  of  insurance  companies,  and 
partnership  firms,  corporations  or  companies  cannot  be  licensed  as  such.  (Opin- 
ion of  Attorney  General,  May  3,  1904.) 

(2)  A  warehouseman,  who  in  his  own  name  procures  from  insurance  com- 
panies policies  "on  cotton  in  bales  owned  or  held  by  the  assured  in  trust  or  on 
commission  or  on  joint  account  with  others,"  and  thereafter  charging  his  patrons 
their  proper  proportion  of  insurance  carried  by  him  in  trust  for  their  benefit, 
does  not  thereby  become  an  insurance  company  or  the  agent  of  any  such  com- 
pany.     (Opinion  of  Attorney  General,  April  29,  1911.) 

(3)  An  adjuster  for  an  insurance  company  may  adjust  losses  occurring  under 
policies  lawfully  issued  by  the  company  while  licensed  in  Texas,  although  at  the 
time  of  the  adjustment  the  company  has  no  authority  to  do  business  in  Texas. 
(Opinion  of  Attorney  General,  June  9,  1911.) 


INSURANCE  LAWS  OF  TEXAS.  169 

Shall  Be  Guilty  of  a  Misdemeanor. 

466.  Any  person  who  shall  do  or  perform  any  of  the  acts  or  things 
mentioned  in  the  preceding  article  for  any  insurance  company  herein- 
before referred  to,  without  such  company  having  first  complied  with 
the  requirements  of  the  laws  of  this   State,  or  having  received  the 
certificate  of  authority  from  the  Commissioner  of  Insurance  and  Bank- 
ing of  the  State  of  Texas,  as  required  by  law,  shall  be  guilty  of  a 
misdemeanor,  and  on  conviction  by  any  court  of  competent  jurisdiction, 
for  the  first  offense  shall  be  fined  five  hundred  dollars,  and  also  a  sum 
equal  to  the  State,  county  and  municipal  licenses  required  to  be  paid 
by  such  insurance  company  for  doing  business  in  this  State,  and  shall 
be  imprisoned  in  the  county  jail  where  the  offense  is  committed  for 
the  period  of  three  months,  unless  the  fine  assessed  against  him  and 
the  sum  of  licenses  herein  mentioned  and  the  cost  of  the   court  be 
sooner  paid;  and  for  any  second  or  other  offense  such  person  shall  be 
fined  in  the  sum 'of  one  thousand  dollars,  and  shall  be  imprisoned  in 
the  county  jail  for  the  period  of  six  months,  unless  the  fines  assessed 
against  him  and  the  costs  of  court  be  sooner  paid.     (P.  C.,  Art.  645.) 

Note. — An  agent  soliciting  subscriptions  to  the  capital  stock  of  an  insurance 
company  not  authorized  to  do  business  in  Texas,  is  not  an  insurance  agent?, 
and  may  lawfully  solicit  such  subscriptions  and  sell  such  stock  without  a  license 
from  the  Commissioner  of  Insurance  and  Banking. 

Persons  Performing  Acts  of  Ag-ent  Shall  Pay  Tax. 

467.  Whenever  any  person  shall  do  or  perform  within  this  State 
any  of  the  acts  mentioned  in  Article  4961  (Sec.  465),  for  or  on  behalf 
of  any  insurance  company  therein  referred  to,  such  company  shall  be 
held  to  be  doing  business  in  the  State,  and  shall  be  subject  to  the  same 
taxes,  State,  county  and  municipal,  as  insurance  companies  that  have 
been  legally  qualified  and  admitted  to  do  business  'in  this  State,  by 
agents  or  otherwise,  are  subject;  the  same  to  be  assessed  and  collected 
as  taxes  are  assessed  and  collected  against  such  companies,  and  such 
persons  so  doing  or  performing  any  of  the  acts  or  things  shall  be  per- 
sonally liable  for  such  taxes.     (E.  S.,  Art.  4962.) 

Shall  Be  liable  to  Policyholders  for  Loss. 

468.  Any  person  who  shall  do  any  of  the  acts  mentioned  in  Article 
4961  (Sec.  465),  for  or  on  behalf  of  any  insurance  company,  without 
such  company  has  first  complied  with  the  requirements  of  the  laws  of 
this  State,  shall  be  personally  liable  to  the  holder  of  any  policy  of 
insurance  in  respect  of  which  such  act  was  done,  for  any  loss  covered  by 
the  same.     (E.  S.,  Art.  4962.)    • 

Fraudulent  Insurance. 

469.  If  any  person  shall  cause  insurance  to  be  made  in  this  State- 
upon  any  merchandise  or  other  commodity  represented  to  be  already 
shipped,  or  about  to  be  shipped,   at  any   place,   whether  within   this 
State  or  out  of  it,  and  shall,  with  intent  to  defraud  the  insurer,  ship 
articles  of  value  less  than  one-half  the  represented  value  of  those  in- 
sured, or  of  a  different  kind  from  those  insured,  he  shall  be  punished 
by  a  fine  in  any  sum  not  exceeding  the  amount  for  which  such  mer- 
chandise or  commodity  may  be  insured.     (P.  C.,  Art.  967.) 


170  INSURANCE  LAWS  OF  TEXAS. 

All  Insurance  Business  Must  Be  Transacted  Through  Authorized  and 
Licensed  Agents — Penalty. 

470.  Any   fire,   fire   and   marine,   marine,   tornado,   rent,   accident, 
casualty,  liability,  health,  elevator,  disability,  plate  glass,  burglary,  bond- 
ing, title,  surety  or  fidelity  insurance   company  legally   authorized  to 
do   business  in    this   State   is   hereby   prohibited   from   authorizing   or 
allowing  any  person,  agent,  firm,  or  corporation  that  is  a  non-resident 
of  the  State  of  Texas  to  issue  or  cause  to  be  issued,  to  sign  or  counter- 
sign, or  to  ^deliver  or  cause  to  be  delivered,  any  policy  or  policies  of 
insurance  on  property,  person  or  persons  located  in  the  State  of  Texas, 
icxcept  through   regularly   commissioned   and  licensed   agents   of   such 
companies  in  Texas;  provided,  however,  that  this  law  shall  not  apply 
to  property  owned  by  the  railroad  companies  or  other  common  carriers; 
and  provided  further,  that  upon  oath  made  in  writing  by  any  person, 
that  he  cannot  procure  insurance  on  property  through  such  agents  in 
Texas,  it  shall  be  lawful  for  any  insurance  company  not  having  an 
agent  in  Texas  to  insure  property  of  any  person  upon  application  of 
.said  person,  upon  his  filing  said  oath  with  the  county  clerk  of  the 
county  in  which  such  person  resides.     (R.  S.,  Art.  4963.) 

Note. —  ( 1 )  A  licensed  fire  insurance  company  is  not  prohibited  from  paying 
«,  commission  to  a  non-resident  agent  on  business  on  Texas  property,  provided 
the  policy  be  issued  through  a  licensed  resident  agent  in  this  State.  (Opinion 
of  Attorney  General,  August  24,  1909.) 

(2)  An  insurance  company  can  issue  a  policy  through  a  non-resident  agent 
provided  the  policy  is  issued,  signed  or  countersigned  by  a  local  agent  who  is 
duly  licensed  in  the  State.  (Opinion  of  Attorney  General,  November  21,  1916.) 

^Required  to  File  Affidavit  That  the  Law  Has  Not  Been  Violated. 

471.  Before   a   certificate   or  license   to   any   fire,   fire   and  marine, 
marine,  tornado,  rent,  accident,  casualty,  liability,  health,  elevator,  dis- 
ability, plate  glass,  burglary,  bonding,  title,  surety  or  fidelity  insurance 
-company  is  issued  authorizing  it  to  transact  business  in  this  State,  the 
Insurance  Commissioner  shall  require  in  every  case,  in  addition  to  the 
'other  requirements  already  made  and  provided  J)y  the  law  that  each  and 
:all  ;such  insurance  companies  herein  mentioned  shall  file  with  him  an 
affidavit  that  it  has  not  violated  any  provision  of  this  law.      (E.   S., 
Art.  4964.) 

Agent  of  Company  Prohibited  From  Paying  Commission  or  Valuable  Con- 
sideration on  Account  of  Policy  on  Property  or  Persons  in  Texas  to 
^Non-Residents  or  to  Any  Person  Not  a  Licensed  Agent. 

472.  Any  person,  agent,  firm  or  corporation  licensed  by  the  Com- 
•missioner  of  Insurance  to  act  as  a  fire  and  marine,  marine,  tornado, 
rent,  accident,  casualty,  liability,  health,  elevator,  disability,  plate  glass, 
burglary,  bonding,  title,  surety  or  fidelity  insurance  agent  in  the  State 
of  Texas,  is  hereby  prohibited  from  paying,  directly  or  indirectly,  any 
commission,  brokerage,  or  other  valuable  consideration  on  account  of 
any  policy  or  policies  covering  property,  person,  persons,  in  the  State 
of  Texas,  to  any  person,  persons,  agent,  firm  or  corporation  that  is 
a  non-resident  of  the   State  of  Texas,  or  to   any  person  or  persons, 
.•agent,  firm  or  corporation  not  duly  licensed  by  the  Commissioner  of 
Insurance  and  Banking  of  the  State  of  Texas  as  a  fire,  fire  and  marine, 


INSURANCE  LAWS  OF  TEXAS.  171 

marine,  tornado,  rent,  accident,  casualty,  liability,  health,  elevator,  dis- 
ability, plate  glass,  burglary,  bonding,  title,  surety  or  fidelity  insurance 
agent.  (R.  S.,  Art.  4965.) 

Note. — A  corporation  cannot  be  a  licensed  agent  of  an  insurance  company, 
and  the  stockholders  of  a  corporation,  individually  licensed  as  agents  of  in- 
surance companies,  are  prohibited  from  paying  to  the  corporation  any  part  of 
their  commissions  as  insurance  agents.  (Attorney  General's  opinion,  May  17, 
19110 

Commissioner  Must  Investigate  Any  Violation  of  the  Provisions  of  This 
Act — Penalty  Cumulative. 

473.  Whenever  the  Commissioner  of  Insurance  and  Banking  shall 
have   or   receive   notice   or   information   of   any   violation   of   any   of 
the  provisions  of  this  law,  he  shall  immediately  investigate  or  cause  to 
be  investigated  such  violation,  and  if  a  fire,  fire  and  marine,  marine,, 
tornado,   rent,   accident,  casualty,  liability,  health,  elevator,  disability,, 
plate  glass,  burglary,  bonding,  title,  surety  or  fidelity  insurance  com- 
pany has  violated  any  of  such  provisions  aforesaid,  he  shall  immediately 
revoke  his  license  for  not  less  than  three  months,  nor  more  than  six 
months,  for  the  first  offense,  and  for  each  offense  thereafter  for  not 
less  than  one  year,  and  if  any  person,  agent,  firm  or  corporation  licensed 
by  the  Commissioner  of  Insurance  and  Banking  as  a  fire,   fire   and 
marine,  marine,  tornado,  rent,  accident,  casualty,  liability,  health,  ele- 
vator, disability,  plate  glass,  burglary,  bonding,  title,  surety  or  fidelity 
insurance  agent  shall  violate  or  cause  to  be  violated  any  of  the  pro- 
visions of  this  law,  he  snail  for  the  first  offense  have  his  license  re- 
voked for  all  companies  for  which  he  has  been  licensed,  for  not  less 
than  three  months,  and  for  the  second  offense  he  shall  have  his  license' 
revoked  for  all  companies  for  which  he  is  licensed,  and  shall  not  there- 
after be  licensed  for  any  company  for  one  year  from  date  of  revo.- 
catkm.     (R.  S.,  Art  4966.) 

Tor  Purpose  of  Enforcing  Provisions  of  This  Act  Commissioner  to  Ex- 
amine Books,  Etc.,  at  Head  Office  and  at  Companies'  Expense — Other- 
Towers. 

474.  For  the  purpose  of  enforcing  the  provisions  of  this  law,  the 
Commissioner  of  Insurance  and  Banking  is  hereby  authorized  and  it  is 
made  his  duty,  at  the  expense  of  the  company  investigated,  to  examine 
at  the  head  office,  located  within  the  United  States  of  America,  all 
books,  records,  and  papers  of  such  company  and  also  any  officers  or 
employes  thereof  under  oath  as  to  violations  of  this  law,  and  he  is 
further  hereby  empowered  to  examine  any  person  or  persons,  administer 
oaths  and  send  for  papers  and  records,  and  failure  or  refusal  upon  the 
part  of  any  fire,  fire  and  marine,  marine,  tornado,  rent,  accident,  cas- 
ualty, liability,  health,  elevator,  disability,  plate  glass,  burglary,  bond- 
ing,  title,   surety   or   fidelity   insurance   company,   person    or   persons, 
agent,   firm   or  corporation,   licensed   to   do   business   in   the   State   of' 
Texas  to  appear  before  the  Commissioner  of  Insurance  and  Banking 
when  requested  to  do  so  or  to  produce  records  and  papers,  or  answers 
under  oath,  shall  subject  such  fire,  fire  and  marine,  marine,  tornado, 
rent,  accident,  casualty,  liability,  health,  elevator,  disability,  plate  glass,, 
burglary,  bonding,  title,  surety  or  fidelity  insurance  company,  person 


172  INSURANCE  LAWS  OF  TEXAS. 

or  persons,  agent,  firm,  corporation  to  the  penalties  of  this  law.     (R.  S., 
Art.  4967.) 

Shall  Be  Regarded  as  Agent  of  Company  in  Controversy. 

475.  Any  person  who  shall  solicit  an  application  for  insurance  upon 
the  life  of  another  shall  in  any  controversy  between  the  assured  and 
his  beneficiary  and  the  company  issuing  any  policy  upon  such  appli- 
cation be  regarded  as  the  agent  of  the  company,  and  not  the  agent 
of  the  insured,  but  such  agent  shall  not  have  the  power  to  waive,  change 
or  alter  any  of  the  terms  or  conditions  of  the  application  or  policy. 
(E.  S.,  Art.  4968.) 

Corporation  or  Stock  Company  Shall  Not  Be  Licensed. 

476.  No  corporation  or  stock  company  shall  be  licensed  or  granted 
a  certificate  of  authority  as  the  agent  or  representative  of  any  life  in- 
surance company  in  soliciting,  selling  or  in  any  manner  placing  life 
insurance  policies  or  contracts  in  this  State.     No  life  insurance  com- 
pany shall,  after  June  30,  1903,  be  granted  a  certificate  of  authority 
to  transact  business  in  this  State  which  has  or  is  bound  by  any  valid 
subsisting  contract  with  any  other  corporation,  by  virtue  of  which  such 
other  corporation  is  entitled  to  receive  directly  or  indirectly  in   (any) 
percentage  or  portion  of  the  premium  or  other  income  of  such  life  insur- 
ance company  for  any  period.     No  person  shall  hereafter  be  granted 
a  certificate  of  authority  as  the  agent  of  any  life  insurance  company 
who,  after  June  30,  1903,  enters  into  any  contract  with  any  corpora- 
tion other  than  such  life  insurance  company,  by  virtue  of  which  such 
other  corporation  is  entitled  to  receive,  directly  or  indirectly,  any  com- 
pensation earned  by  him  as  agent  for  such  life  insurance  company,  or 
any  percentage  or  portion  thereof  for  any  period.     (R.  S.,  Art.  4969.) 

Note. — A  life  insurance  company,  having  a  contract  with  one  of  its  officers 
under  which  he  is  paid  a  commission  on  any  part  of  the  company's  business, 
cannot  be  licensed  to  do  business  in  Texas,  notwithstanding  such  contract  was 
made  before  the  law  in  above  section  became  effective.  (Opinion  of  Attorney 
General,  March  14,  1911.) 

Companies  Shall  Designate  Officer  or  Agent  to  Appoint  Agents. 

477.  Every  such  foreign  company  shall,  by  resolution  of  its  board 
of  directors,  designate  some  officer  or  agent  who  is  empowered  to  ap- 
point or  employ  its  agents  or  solicitors  in  this  State,  and  such  officer 
or  agent  shall  promptly  notify  the   Commissioner  in   writing  of  the 
name,  title  and  address  of  each  person  so  appointed  or  employed.    Upon 
receipt  of  this  notice,  if  such  person  is  of  good  reputation  and  char- 
acter, the  Commissioner  shall  issue  to  him  a  certificate,  which  shall 
include  a  copy  of  the  certificate  of  authority,  authorizing  the  company 
requesting  it  to  do  business  in  this  State  and  the  name  and  title  of 
the  person  to  whom  the  certificate  is  issued.     Such  certificate,  unless 
sooner  revoked  by  the  Commissioner  for  cause  or  canceled  at  the  re- 
quest of  the  company  employing  the  holder  thereof,  shall  continue  in 
force  until  the  first  day  of  March  next  after  its  issuance  and  must  be 
renewed  annually.     (E.  S.,  Art.  4970.) 


INSURANCE  LAWS  OF  TEXAS.  173 

Note. — The  lists  of  licensed  insurance  agents  on  file  in  the  Department  of 
Insurance  are  public  records,  but  are  not  subject  to  an  unqualified  inspection 
by  the  public.  The  Commissioner  has  the  right  to  refuse  inspection  which 
would  be  prejudicial  to  public  interest.  To  permit  persons  connected  with  one 
insurance  company  to  make  copies  of  the  names  of  agents  of  another  company 
would  be  prejudicial  to  public  interest.  Such  inspection  should  be  permitted 
only  for  the  protection  of  a  private  right  or  the  enforcement  of  law.  (Opinion 
of  Attorney  General,  April  1,  1914.) 

Commissioner  Shall  Revoke  License. 

478.  Cause  for  the  revocation  of  the  certificate  of  authority  of  an 
agent  or  solicitor  for  an  insurance  company  may  exist  for  violation  of 
any  of  the  insurance  laws,  or  if  it  shall  appear  to  the  Commissioner 
upon  due  proof,  after  notice  that  such  agent  or  solicitor  has  knowingly 
deceived  or  defrauded  a  policyholder  or  a  person  having  been  solicited 
for  insurance,  or  that  such  agent  or  solicitor  has  unreasonably  failed 
and  neglected  to  pay  over  to  the  company,  or  its  agent  entitled  thereto, 
any  premium  or  part  thereof,  collected  by  him  on  any  policy  of  insur- 
ance or  application  therefor.     The  Commissioner  shall  publish   such 
revocation  in  such  manner  as  he  deems  proper  for  the  protection  of 
the  public,  and  no  person  whose  certificate  of  authority  as  agent  or 
solicitor  has  been  revoked  shall  be  entitled  to  again  receive  a  certificate 
of  authority  as  such  agent  or  solicitor  for  any  insurance  company  in 
this  State  for  a  period  of  one  year.     (E.  S.,  Art.  4971.) 

Penalty  for  Acting  Without  Certificate. 

479.  Any  person  who  for  direct  or  indirect  compensation  solicits 
insurance,  in  behalf  of  any  company,  or  transmits  for  a  person  other 
than  himself,  an  application  for  a  policy  of  insurance  to  or  from  such 
company,  or  assumes  to  act  in  negotiation  of  insurance  without  a  cer- 
tificate of  authority  to  act  as  agent  or  solicitor  for  such  company,  or 
after  such  certificate  of  authority  shall  have  been  canceled  or  revoked, 
shall  be  guilty  of  a  misdemeanor  and  upon  conviction  shall  be  punished 
by  a  fine  of  not  less  than  $100.     (P.  C.,  Art.  689.) 

Penalty  for  Procuring  by  False  Representations  Payment  of  Premiums. 

480.  Any  such  agent  or  solicitor  who  knowingly  procures  by  fraud- 
ulent representation  payment  of  any  obligation  for  the  payment  of  a 
premium  of  insurance  shall  be  deemed  guilty  of  a  misdemeanor  and 
upon  conviction  shall  be  punished  by  a  fine  of  not  less  than  one  hun- 
dred dollars,  nor  more  than  one  thousand  dollars.     (P.  C.,  Art.  690.) 

Penalty  for  Bmbezzlement. 

481.  Any  insurance  agent  or  solicitor  who  collects  prehiiums  for 
an  insurance  company  lawfully  doing  business  in  this  State  and  who 
embezzles  or  fraudulently  converts  or  appropriates  to  his  own  use,  or 
with   intent  to   embezzle   takes,   secretes  or   otherwise   disposes   of   or 
fraudulently  withholds,  appropriates,  lends,  invests  or  otherwise  uses  or 
applies  any  money  or  substitutes  for  money  received  by  him  as  such 
agent  or  broker,  contrary  to  the  instructions  or  without  the  consent  of 
the  company  for  or  on  account  of  which  the  same  was  received  by  him 
shall  be  deemed  guilty  of  theft  of  property  of  the  value  of  the  amount 


174  INSURANCE  LAWS  OF  TEXAS. 

involved  in  either  case,  and  shall  be  punished  accordingly.      (P.   C., 
Art.  691.) 

Penalty  for  False  Statements. 

482.  Any .  solicitor,  agent  or  examining  physician  who  shall  know- 
ingly or  wilfully  make  any  false  or  fraudulent  statement  or  repre- 
sentation in  or  with  reference  to  any  application  for  insurance  shall 
be  deemed  guilty  of  a  misdemeanor  and  upon  conviction  shall  be  pun- 
ished by  a  fine  of  not  less  than  one  hundred  dollars,  nor  more  than 
five  hundred  dollars.     (P.  C.,  Art.  692.) 

Annual  Occupation  Tax. 

483.  There  shall  be  levied  on  and  collected  from  every  person,  firm, 
company  or  association  of  persons  pursuing  any  of  the  occupations 
named  in  the  following  numbered  subdivisions  of  this  article,  an  an- 
nual occupation  tax,  which  shall  be  paid  annually  in  advance,  except 
when  herein  otherwise  provided,  on  every  such  occupation  or  separate 
establishment,  as  follows:     *     *     *     (R.  S.,  Art.  7355.) 

Insurance  Adjusters  and  General  Agents. 

484.  From   each  and  every  person   acting  as  general   adjuster   of 
losses,  or  agents  of  life,  fire,  marine  and-  accident  insurance  companies, 
who  may  transact  any  business  as  such  in  this  State,  an  annual  occu- 
pation tax  of  fifty  dollars.     By  "general  agent/3  as  used  in  this  law,  is 
meant  any  person  or  firm,  representative  of  any  insurance  company  in 
this  State,  or  who  may  exercise  a  general  supervision  over  the  business 
of   such  insurance  company  in  this   State,  or  over  the  local   agency 
thereof  in  this  State,  or  any  subdivision  thereof.     (Sec.  20,  R.  S.,  Art. 
7355.) 

Note. —  (1)  The  occupation  tax  on  local  agents  and  all  life  insurance  agents 
has  been  repealed. 

(2)  The  statute  levies  an  occupation  tax  of  $50  against  State  or  general 
agents  of  fire  insurance  companies  and  permits  counties  and  cities  to  levy  one- 
half  that  amount.  (Opinion  of  Attorney  General,  August  28,  1915.) 


CHAPTER  XXII. 

FRATERNAL  BENEFIT   SOCIETIES. 

Fraternal  Benefit  Societies  Defined. 

485.  Any  corporation,  society,  order  or  voluntary  association,  with- 
out capital  stock,  organized  and  carried  on  solely  for  the  mutual  benefit 
of  its  members  and  their  beneficiaries,  and  not  for  profit,  and  having  a 
lodge  system  with  ritualistic  form  of  work  and  representative  form 
of  government,  and  which  shall  make  provision  for  the  payment  of 
benefits  in  accordance  with  Section  5  hereof,  is  hereby  declared  to  be 
a  fraternal  benefit  society.     (33d  Leg.,  Chap.  113,  Sec.  1.) 

Lodge  System  Defined. 

486.  Any  society  having  a  supreme  governing  or  legislative  body 
and  subordinate  lodges  or  branches   by  whatever  name   known,   into 


INSURANCE  LAWS  OF  TEXAS.  175 

which  members  shall  be  elected,  initiated  and  admitted  in  accordance 
with  the  constitution,  laws,  rules,  regulations  and  prescribed  ritualistic 
ceremonies,  which  subordinate  lodges  or  branches  shall  be  required  by 
the  laws  of  such  society  to  hold  regular  or  stated  meetings  at  least 
once  in  each  month,  shall  be  deemed  to  be  operating  on  the  lodge  sys- 
tem. (Id.,  Sec.  2.) 

Note. — A  fraternal  benefit  society  has  no  authority  to  issue  membership  cer- 
tificates to  persons  who  have  not  been  elected  and  initiated  into  the  order  by 
its  ritualistic  ceremonies.  (Opinion  of  Attorney  General,  December  20,  1918.) 

Representative  Form  of  Government  Denned. 

487.  Any  such  society  shall  be  deemed  to  have  a  representative  form 
of  government  when  it  shall  provide  in  its  constitution  and  laws  for 
a  supreme  legislative  or  governing  body,  composed  of  representatives, 
elected  either  by  the  members  or  by  delegates  elected,  directly  or  in- 
directly by  the  members,  together  with  such  other  members  as  may  be 
prescribed  by  its  constitution  and  laws;   provided,   that  the   elective 
members  shall  constitute  a  majority  in  number  and  have  not  less  than 
two-thirds  of  the  votes,  nor  less  than  the  votes  required  to  amend  its 
constitution   and   laws;   provided   further,   that  the   meetings    of   the 
supreme  or  governing  body,  and  the  election  of  officers,  representatives 
or  delegates,  shall  be  held  as  often  as  once  in  four  years.     The  mem- 
bers, officers,  representatives  or  delegates  of  a  fraternal  benefit  society 
shall  not  vote  by  proxy.     (Id.,  Sec.  3.) 

Note. — A  fraternal  beneficiary  association  organized  under  the  laws  of  an- 
other State,  and  doing  business  under  a  license  in  Texas  prior  to  the  date 
when  the  laws  of  Texas,  governing  such  associations,  became  effective  (July  12, 
1909),  and  continuously  since  that  date,  is  not  required,  as  a  prerequisite  to 
renewal  of  its  Texas  license,  to  hold  meetings  of  its  supreme  governing  body 
as  often  as  once  every  four  years  unless  the  laws  of  its  home  State  so  pre- 
scribe. (Opinion  of  Attorney  General,  May  23,  1913.) 

Exemptions. 

488.  Except  as  herein  provided,  such  societies   shall  be  governed 
by  this  act,  and  shall  be  exempt  from  all  provisions  of  the  insurance 
laws  of  this  State,  not  only  in  governmental  relations  with  the  State, 
but  for  every  other  purpose,  and  no  law  hereafter  enacted  shall  apply 
to  them,  unless  they  be  expressly  designated  therein.     (Id.,  Sec.  4.) 

Benefits. 

489.  Every  society  transacting  business  under  this  act  shall  pro- 
vide for  the  payment  of  death  benefits,  and  may  provide  for  the  pay- 
ment of  benefits  in  case  of  temporary  or  permanent  physical  disability, 
either  as  the  result  of  disease,  accident  or  old  age;  provided,  the  period 
of  life  at  which  the  payment  of  benefits  for  disability  on  account  of 
old  age  shall  commence  shall  not  be  under  seventy  years  and  may 
provide  for  monuments  or  tombstones  to  the  memory  of  its  deceased 
members,  and  for  the  payment  of  funeral  benefits.     Such  society  shall 
have  the  power  to  give  a  member,  when  permanently  disabled  or  on 
attaining  the  age  of  seventy,  all  or  such  portion  of  the  face  value  of 
his  certificate  as  the  laws  of  the  society  may  provide;  provided,  that 
nothing  in  this  act  contained  shall  be  so  construed  as  to  prevent  the 


176  INSURANCE  LAWS  OF  TEXAS. 

issuing  of  benefit  certificates  for  a  term  of  years,  less  than  the  whole  of 
life  which  are  payable  upon  the  death  or  disability  of  the  member  oc- 
curring within  the  term  for  which  the  benefit  certificates  may  be  issued. 
Such  society  shall,  upon  written  application  of  the  member,  have  the 
power  to  accept  a  part  of  the  periodical  contributions  in  cash,  and 
charge  the  remainder,  not  exceeding  one-half  of  the  periodical  contri- 
bution, against  the  certificate,  with  interest  payable  or  compounded 
annually  at  a  rate  not  lower  than  four  per  cent  per  annum;  provided, 
that  this  privilege  shall  not  be  granted  except  to  societies  which  have 
readjusted  or  may  hereafter  readjust  their  rates  of  contribution,  and  to 
contracts  affected  by  such  readjustment. 

Note. — A  fraternal  benefit  society  has  no  lawful  authority  to  pay  a  funeral 
benefit  upon  the  death  of  a  husband  or  wife  of  a  member,  such  deceased  person 
not  being  a  member  of  the  society.  Such  funeral  benefits  may  lawfully  be  paid 
only  to  beneficiaries  under  certificates  issued  to  members  as  provided  in  the 
statute  defining  who  may  be  beneficiaries  under  a  fraternal  benefit  certificate. 
(Opinion  of  Attorney  General,  April  2,  1920.) 

Any  society  which  shall  show  by  the  annual  valuation  hereinafter 
provided  for,  that  it  is  accumulating  and  maintaining  the  reserve  not 
lower  than  the  usual  reserve  computed  by  the  American  Experience 
Table  and  five  per  cent  interest  may  grant  to  its  members  extended 
and  paid-up  protection,  or  such  withdrawal  equities  as  its  constitution 
and  laws  may  provide;  provided,  that  such  grants  shall  in  no  case 
exceed  in  value  the  portion  of  the  reserve  to  the  credit  of  such  mem- 
bers to  whom  they  are  made.  (Id.,  Sec.  5.) 

Beneficiaries. 

490.  The  payment  of  death  benefits  shall  be  confined  to  wife,  hus- 
band, relative  by  blood  to  the  fourth  degree,  father-in-law,  mother- 
in-law,  son-in-law,  daughter-in-law,  stepfather,  stepmother,  stepchildren, 
children  by  legal  adoption,  or  to  a  person  or  persons  dependent  upon 
the  member;  provided,  that  if  after  the  issuance  of  the  original  cer- 
tificate the  member  shall  become  dependent  upon  an  incorporated  char- 
itable institution,  he  shall  have  the  privilege,  with  the  consent  of  the 
society,  to  make  such  institution  his  beneficiary.     Within  the  above  re- 
strictions  each  member  shall  have  the   right  to   designate   his   bene- 
ficiary, and  from  time  to  time  have  the  same  changed  in  accordance 
with  the  laws,  rules  and  regulations  of  the  society,  and  no  beneficiary 
shall  have  or  obtain  any  vested  interest  in  the  said  benefit  until  the 
same  has  become  due  and  payable  upon  the  death  of  the  said  member; 
provided,  that  any  society  may,  by  its  laws,  limit  the  scope  of  bene- 
ficiaries within  the  above  classes.     (Id.,  Sec.  6.). 

Note. — A  fraternal  beneficiary  association,  whose  laws  provide  that  the  affi- 
anced husband  or  wife  of  a  member  may  be  a  beneficiary  in  its  certificate,  and 
whose  laws  fail  to  provide  for  the  levy  of  special  assessments  when  necessary 
to  meet  its  obligations,  cannot  be  licensed  to  do  business  in  Texas.  (Opinion 
of  Attorney  General,  January  1,  1913.) 

Religious,  Eleemosynary  or  Educational  Societies  May  Be  Beneficiaries. 

491.  That  fraternal  benefit  societies  heretofore  or  hereafter  incor- 
porated by  the  State  of  Texas  or  licensed  to  do  business  therein,  shall 


INSURANCE  LAWS  OF  TEXAS.  177 

be  authorized  to  provide  in  their  constitutions,  by-laws  or  fundamental 
laws  for  the  issuance  of  benefit  certificates  to  their  members,  wherein 
any  association,  society  or  corporation  organized  and  operated  for  re- 
ligious, eleemosynary  or  educational  purposes  may  be  named  as  bene- 
ficiary. (Acts  35th  Leg.,  Chap.  162,  Sec.  1.) 

Qualifications  for  Membership. 

492.  Any  society  may  admit  to  beneficial  membership  any  person 
not  less  than  sixteen  and  not  more  than  sixty  years  of  age,  who  has 
been  examined  by  a  legally  qualified  physician,  and  whose  examination 
has  been  supervised  and  approved  in  accordance  with  the  laws  of  the 
society;   provided,  that  any  beneficiary  member  of  such  society  who 
shall  apply  for  a  certificate  providing  for  disability  benefits  need  not 
be  required  to  pass  an  additional  examination  therefor.     Nothing  herein 
contained  shall  prevent  such  society  from  accepting  general  or  social 
members.     (Acts  33d  Leg.,  Chap.  113,  Sec.  7.) 

Note. — A  fraternal  benefit  society  may  have  social  or  general  members  who 
do  not  carry  insurance,  but  in  every  instance,  without  any  exception,  'social  or 
general  members  must  be  elected  and  initiated  into  the  order  with  ritualistic 
ceremonies,  the  same  as  are  beneficial  members.  (Opinion  of  Attorny  General, 
December  20,  1918.) 

May  Provide  by  Constitution  and  By-Laws  for  Insuring  Lives  of  Children. 

493.  Any  fraternal  benefit  society  authorized  to  do  business  in  this 
State  and  operating  on  the  lodge  plan,  may  provide  in  its  constitution 
and  by-laws,  in  addition  to  other  benefits  provided  for  therein,  for  the 
payment  of  death  or  annuity  benefits  upon  the  lives  of  children  be- 
tween the  ages  of  two  and  eighteen  years  at  next  birthday,  for  whose 
support  and  maintenance  a  member  of  such  society  is  responsible.     Any 
such  society  may  at  its  option  organize  and  operate  branches  for  such 
children  and  membership  in  local  lodges  and  initiation  therein  shall 
not  be  required  of  such  children,  nor  shall  they  have  any  voice  in  the 
management  of  the  society.     The  total  benefits  payable  as  above  pro- 
vided shall  in  no  case  exceed  the  following  amounts  at  ages  at  next 
birthday  at  time  of  death,  respectively,  as  follows: 

Between  the  Between  the 

ages  of  Amount.               ages  of  Amount. 

2  and  3  $  34  8  and     9  $200  00 

3  and  4  40  9  and  10  240  00 

4  and  5  48  10  and  11  300  00 

5  and  6  58  11  and  12  380  00 

6  and  7  140  12  and  13  460  00 

7  and  8  160  13  and  16  520  00 

16  and  18  600  00. 

(Acts  35th  Leg.,  Chap.  192,  Sec.  1.) 

Note. — Juvenile  insurance  policies  cannot  be  issued  under  the  fraternal  bene- 
ficiary Act  to  dependants  of  a  person  who  has  not  been  elected  and  initiated 
into  the  order  as  a  member.  (Opinion  of  Attorney  General,  December  20,  1918.) 


178  INSURANCE  LAWS  OF  TEXAS. 

Requisites  for  Issuing  Benefit  Certificates  Insuring  Lives  of  Children. 

494.  No  benefit  certificates  as  to  any  child  shall  take  effect  until 
after  medical  examination  or  inspection  by  a  licensed  medical  practi- 
tioner, in  accordance  with  the  laws  of  the  society,  nor  shall  any  such 
benefit  certificate  be  issued  unless  the  society  shall  simultaneously  put 
in  force  or  have  in  force  at  the  time  of  issue  of  said  certificate  at  least 
five  hundred  such  certificates,  on  each  of  which  at  least  one  assessment 
has  been  paid,  nor  where  the  number  of  lives  represented  by  like  cer- 
tificates falls  below  five  hundred.     The  death  benefit  contributions  to 
be  made  upon  such  certificate  shall  be  based  upon  the  "Standard  In- 
dustrial Mortality  Table"  or  the  "English  Life  Number  Six"  and  a 
rate  of  interest  not  greater  than  four  per  cent  per  annum,  or  upon  a 
higher  standard;   provided,   that  contributions  may  be  waived  or   re- 
turns may  be  made  from  any  surplus  held  in  excess  of  reserve  and  other 
liabilities,  as  provided  in  the  by-laws,  and  provided  further  that  extra 
contributions  shall  be  made  if  the  reserves  hereafter  provided  for  be- 
come impaired.     (Acts  35th  Leg.,  Chap.  192,  Sec.  2.) 

Funds  Accruing  From.  Contributions  for  Insuring  Lives  of  Children  and 
All  Accretions  From  Same  Shall  be  Kept  Separate — Such  Certificate 
May  Be  Exchanged  for  Membership  Certificate  When  the  Child  Ar- 
rives at  Age  for  Initiation. 

495.  Any  society  entering  into  such  insurance  agreement  shall  main- 
tain on  all  such  contracts  the  reserve  required  by  the  standard  of  mor- 
tality and  interest  adopted  by  the  society  for  computing  contributions, 
as  provided  in  Section  2   (Sec.  494),  and  the  funds  representing  the 
benefit  contributions  and  all  accretions  thereon  shall  be  kept  as  sep- 
arate and  distinct  funds,  independent  of  the  other  funds  of  the  society, 
and  shall  not  be  liable  for  nor  used  for  the  payment  of  the  debts  and 
obligations  of  the  society  other  than  the  benefits  herein  authorized; 
provided,  that  a  society  may  provide  that  when  a  child  reaches  the 
minimum  age  for  initiation  into  membership  in  such  society,  any  ben- 
efit certificate  issued  hereunder  may  be  surrendered  for  cancellation  and 
exchanged  for  any  other  form  of  certificate  issued  by  the  society;  pro- 
vided, that  such  surrender  will  not  reduce  the  number  of  lives  insured 
in  the  branch  below  five  hundred,  and  upon  the  issuance  of  such  new 
certificate  any  reserve  upon  the  original  certificate  herein  provided  for 
shall  be  transferred  to  credit  of  the  new  certificate.     Neither  the  per- 
son who  originally  made  application  for  benefits  on  account  of  such 
child,  nor  the  beneficiary  named  in  such  original  certificate,  nor  the 
person  who  paid  the  contribution,  shall  have  any  vested  right  in  such 
new  certificate,  the  free  nomination   of  a  beneficiary  under  the  new 
certificate  being  left  to  the  child  so  admitted  to  benefit  membership. 
(Acts  35th  Leg.,  Chap.  192,  Sec.  3.) 

Separate  Statement  on  Business  of  Insuring  Lives  of  Children  Required 
in  Annual  Report  to  Commissioner. 

496.  An  entirely  separate  financial  statement  of  the  business  trans- 
actions and  of  assets  and  liabilities  arising  therefrom  shall  be  made  in 
its  annual  report  to  the  Commissioner  of  Insurance  and  Banking  by 
any  society  availing  itself  of  the  provisions  hereof.     The  separation  of 
assets,  funds  and  liabilities  required  hereby  shall  not  be  terminated,  re- 


INSURANCE  LAWS  OF  TEXAS.  179 

scinded  or  modified,  nor  shall  the  funds  be  diverted  for  any  use  other 
than  as  specified  in  Section  3  (Sec.  495),  as  long  as  any  certificates 
issued  hereunder  remain  in  force,  and  this  requirement  shall  be  recog- 
nized and  enforced  in  any  liquidation,  reinsurance,  merger,  or  other 
change  in  the  condition  of  the  status  of  the  society.  (Acts  35th  Leg., 
Chap.  192,  Sec.  4.) 

The  Society's  Laws  and  Certificate  Insuring  Lives  of  Children  May  Pro- 
vide for  Specified  Payments  on  Account  of  General  or  Expense  Fund. 

497.  Any  society  shall  have  the  right  to  provide  in  its  laws  and  the 
certificate  issued  hereunder  for  specified  payments  on  account  of  the 
expense  or  general  fund,  which  payments  shall  or  shall  not  be  mingled 
with  the  general  fund  of  the  society  as  its  constitution  and  by-laws 
may  provide.     (Acts  35th  Leg.,  Chap.  192,  Sec.  5.) 

Certificate  on  Life  of  Child  May  Be  Continued  for  Benefit  of  the  Child's 
Estate,  When. 

498.  In  the  event  of  the  termination  of  membership  in  the  society 
by  the  person  responsible  for  the  support  of  any  child,  on  whose  ac- 
count a  certificate  may  have  been  issued,  as  provided  herein  the  cer- 
tificate may  be  continued  for  the  benefit  of  the  estate  of  the  child;  pro- 
vided, the  contributions  are  continued,  or  for  the  benefit  of  any  other 
person  responsible  for  the  support  and  maintenance  of  such  child,  who 
shall  assume  the  payment  of  the  required  contributions.     (Acts  35th 
Leg.,  Chap.  192,  Sec.  6.) 

Certificate. 

499.  Every  certificate  issued  by  any  such  society  shall  specify  the 
amount  of  benefit  provided  thereby,  and  shall  provide  that  the  certifi- 
cate, the  charter  or  articles  of  incorporation   (or,  if  a  voluntary  asso- 
ciation,, the  articles  of  association),  the  constitution  and  laws  of  the 
society,  and  the  application  for  membership  and  medical  examination, 
signed  by   the   applicant,   and   all  amendments   to   each  thereof,   shall 
constitute   the   agreement  between   the  society   and   the   member,   and 

'copies  of  the  same,  certified  by  the  secretary  of  the  society,  or  corre- 
sponding officer,  shall  be  received  in  evidence  of  the  terms  and  condi* 
tions  thereof,  and  any  changes,  additions  or  amendments  to  said  char- 
ter, or  articles  of  incorporation,  or  articles  of  association,  if  a  volun- 
tary association,  a  constitution  or  laws  duly  made  or  enacted  subse- 
quent to  the  issuance  of  the  benefit  certificates  shall  bind  the  member 
and  his  beneficiaries,  and  shall  govern  and  control  the  agreement  in  all 
respects  the  same  as  though  such  changes,  additions  or  amendments  had 
been  made  prior  to  and  were  in  force  at  the  time  of  the  application  for 
membership.  (Acts  33d  Leg.,  Chap.  113,  Sec.  8.) 

Funds. 

500.  Any  society  may  create,  maintain,  invest,  disburse  and  apply 
an  emergency  surplus  or  other  similar  fund  in   accordance  with  its 
laws.     Unless  otherwise  provided  in  the  contract,  such  funds  shall  be 
held,  invested  and  disbursed  for  the  use  and  benefit  of  the  society,  and 
no  member  or  beneficiary  shall  have  or  acquire  individual  rights  therein 
or  become  entitled-  to  any  apportionment  or  the  surrender  of  any  part 


180  INSURANCE  LAWS  OF  TEXAS. 

thereof,  except  as  provided  in  Section  5  of  this  act.  The  funds  from 
which  benefits  shall  be  paid,  and  the  funds  from  which  the  expenses  of 
the  society  shall  be  defrayed  shall  be  derived  from  periodical  or  other 
payments  by  the  members  of  the  society  and  accretions  of  said  funds; 
provided,  that  no  society,  domestic  or  foreign,  shall  hereafter  be  incor- 
porated or  admitted  to  transact  business  in  this  State  which  does  not 
provide  for  stated  periodical  contributions  sufficient  to  provide  for 
meeting  the  mortuary  obligations  contracted,  when  valued  upon  the 
basis  of  the  National  Fraternal  Congress  Table  of  Mortality  as  adopted 
by  the  National  Fraternal  Congress,  August  23,  1899,  or  any  higher 
standard,  with  interest  assumption  not  more  than  four  per  cent  per 
annum,  nor  write  or  accept  members  for  temporary  or  permanent  dis- 
ability benefits  except  upon  tables  based  upon  reliable  experience,  with 
an  interest  assumption  not  higher  than  four  per  cent  per  annum. 

Deferred  payments  or  installments  of  claims  shall  be  considered  as 
fixed  liabilities  on  the  happenings  of  the  contingency  upon  which  such 
payments  or  installments  are  thereafter  to  be  paid.  Such  liability  shall 
be  the  present  value  of  such  future  payments  or  installments  upon  the 
rate  of  interest  and  mortality  assumed  by  the  society  for  valuation,  and 
every  society  shall  maintain  a  fund  sufficient  to  meet  such  liability,  re- 
gardless of  proposed  future  collections  to  meet  any  such  liabilities. 
(Id.,  Sec.  9.) 

Note.  —  A  fraternal  beneficiary  association  which  provides,  in  its  charter,  or 
constitution  and  by-laws,  for  different  benefits,  beneficiaries,  or  disbursements  of 
its  funds  to  that  provided  by  the  laws  of  Texas,  cannot  be  licensed  to  do  busi- 
ness in  Texas.  (Opinion  of  Attorney  General,  April  15,  1913.) 

Investments. 

501.  Every  society  shall  invest  its  funds  only  in  securities  permitted 
by  the  laws  of  this  State  for  the  investment  of  the  assets  of  life  insur- 
ance companies;  provided,  that  any  foreign  society  permitted  or  seek- 
ing to  do  business  in  this  State  which  invests  funds  in  accordance  with 
the  laws  of  the  State  in  which  it  is  incorporated  shall  be  held  to  meet 
the  requirements  of  this  act  for  the  investment  of  funds  ;  provided,  that 
in  case  the  constitution  and  by-laws  of  the  grand  lodge  or  governing 
body  of  any  such  association  provides  that  all  or  any  part  of  the  bene- 
ficiary or  mortuary  or  insurance  fund  of  such  association  that  is  paid 
in  by  or  collected  from  the  members  of  such  subordinate  or  local  lodge 
may  be  retained  in  the  custody  of  and  controlled  and  managed  by  such 
subordinate  or  local  lodge,  and  designate  what  officers  of  such  sub- 
ordinate or  local  lodge  shall  have  the  custody  and  control  of  such  fund 
and  authorize  such  local  officers  to  loan  or  invest  the  same,  and  such 
local  officer  shall  have  executed  and  filed,  and  shall  from  time  to  time, 
when  required  by  the  Commissioner  of  Insurance  and  Banking,  file 
with  the  Commissioner  of  Insurance  and  Banking  such  bond  or  other 
written  instrument  to  be  prescribed  and  approved  in  terms  and  amount 
by  the  Commissioner  of  Insurance  and  Banking  as  will  indemnify  such 
fund  against  waste,  depletion  or  loss  through  loans,  investment  or  other- 
wise, then  such  fund  so  secured  shall  be  exempt  from  the  provisions 
of  this  act.  (Id.,  Sec.  10.) 


.  —  The  bond  referred  to  in  above  section  should  be  made  payable  to  the 
Commissioner  of  Insurance  and  Banking  and  all  persons  legally  interested  ia 


INSURANCE  LAWS  OF  TEXAS.  181 

the  fund.     Form  recommended  by  Attorney  General.     (Opinion  of  Attorney  Gen- 
eral, December  14,  1911.) 

Distribution  of  Funds. 

502.  Every  provision  of  the  laws  of  the  society  for  payment  by 
members  of  such  society,  in  whatever  form  made,  shall  distinctly  state 
the  purpose  of  the  same  and  the  proportion  thereof  which  may  be  used 
for  expenses,  and  no  part  of  the  money  collected  for  mortuary  or  dis- 
ability purposes,  or  the  net  accretions  of  either  or  any  of  said  funds 
shall  be  used  for  expenses.     (Id.,  Sec.  11.) 

Organization. 

503.  Seven  or  more  persons,  citizens  of  the  United  Staies,  and  a 
majority  of  whom  are  citizens  of  this  State,  who  desire  to  form  a  fra- 
ternal benefit  society,  as  defined  by  this  act,  may  make  and  sign  (giving 
their  addresses)  and  acknowledge  before  some  officer  competent  to  take 
acknowledgment  of  deeds,  articles  of  incorporation,  in  which  shall  be 
stated: 

First.  The  proposed  corporate  name  of  the  society,  which  shall  (not) 
so  closely  resemble  the  name  of  any  society  or  insurance  company  al- 
ready transacting  business  in  this  State  as  to  mislead  the  public  or  to 
lead  to  confusion. 

Second.  The  purpose  for  which  it  is  formed,  which  shall  not  in- 
clude more  liberal  powers  than  are  granted  by  this  act;  provided,  that 
any  lawful,  social,  intellectual,  educational,  charitable,  benevolent,  moral 
or  religious  advantages  may  be  set  forth  among  the  purposes  of  the 
society,  and  the  mode  in  which  its  corporate  powers  are  to  be  exercised. 

Third.  The  names,  residences  and  official  titles  of  all  the  officers, 
trustees,  directors  or  other  persons  who  are  to  have  and  exercise  the 
general  control  and  management  of  the  affairs  and  funds  of  the  society 
for  the  first  year,  or  until  the  ensuing  election  at  which  all  such  officers 
shall  be  elected  by  the  supreme  legislative  or  governing  body,  which 
election  shall  be  held  not  later  than  one  year  from  the  date  of  the 
issuance  of  the  permanent  certificate. 

Fourth.  Such  articles  of  incorporation  and  duly  certified  copies  of 
the  constitution  and  laws,  rules  and  regulations,  and  copies  of  all  pro- 
posed forms  of  benefit  certificates,  applications  therefor  and  circulars 
to  be  issued  by  such  society,  and  a  bond  in  the  sum  of  five  thousand 
dollars,  with  sureties  approved  by  the  Commissioner  of  Insurance  and 
Banking,  conditioned  upon  the  return  of  the  advance  payments,  as 
provided  in  this  section,  to  applicants,  if  the  organization  is  not  com- 
pleted within  one  year,  'shall  be  filed  with  the  Commissioner  of  Insur- 
ance and  Banking,  who  may  require  such  further  information  as  he 
deems  necessary,  and  if  the  purposes  of  the  society  conform  to  the  re- 
quirements of  this  act,  and  all  provisions  of  law  have  been  complied 
with,  the  Commissioner  of  Insurance  and  Banking  shall  so  certify  and 
retain  and  record  (or  file)  the  articles  of  incorporation,  and  furnish 
the  incorporators  a  preliminary  certificate  authorizing  said  society  to 
solicit  members  as  hereinafter  provided. 

Upon  receipt  of  said  certificate  from  the  Commissioner  of  Insurance 
and  Banking  said  society  may  solicit  members  for  the  purpose  of  com- 
pleting its  organization  and  shall  collect  from  each  applicant  the 


1S2  INSURANCE  LAWS  OF  TEXAS. 

amount  of  not  less  than  one  regular  monthly  payment,  in  accordance 
with  its  table  of  rates  as  provided  by  its  constitution  and  laws,  and 
shall  issue  to  each  such  applicant  a  receipt  for  the  amount  so  collected. 
But  no  such  society  shall  incur  any  liability  other  than  for  such  ad- 
vanced payments,  nor  issue  any  benefit  certificate  nor  pay  or  allow> 
or  offer  or  promise  to  pay  or  allow,  to  any  person  any  death  or  dis- 
ability benefit  until  actual  bona  fide  applications  for  death  benefit  cer- 
tificates have  been  secured  upon  at  least  five  hundred  lives  for  at  least 
one  thousand  dollars  each,  and  all  such  applications  for  death  benefits 
shall  have  been  regularly  examined  by  legally  qualified  practicing  phy- 
sicians and  certificates  of  such  examination  have  been  duly  filed  and 
approved  by  the  chief  medical  examiner  of  such  society;  nor  until  there 
shall  be  established  ten  subordinate  lodges  or  branches  into  which  said 
five  hundred  applicants  have  been  initiated;  nor  until  there  has  been 
submitted  to  the  Commissioner  of  Insurance  and  Banking,  under  oath 
of  the  president  and  secretary  or  corresponding  officers  of  such  society, 
a  list  of  such  applicants,  giving  their  names,  addresses,  date  examined, 
date  approved,   date  initiated,  name  and  number  of  the   subordinate 
branch  of  which  each  applicant  is  a  member,  amount  of  benefits  to  be 
granted,  rate  of  stated  periodical  contributions,  which   shall  be   suffi- 
cient to  provide  for  meeting  the  mortuary  obligation  contracted,  when 
valued  for  death  benefits  upon  the  basis  of  the  National  Fraternal  Con- 
gress Table  of  Mortality,  as  adopted  by  the  National  Fraternal  Con- 
gress, August  23,  1899,  or  any  higher  standard,  at  the  option  of  the 
society,  and  for  disability  benefits  by  tables  based  upon  reliable  experi- 
ence and  for  combined  death  and  permanent  total  disability  benefits  by 
tables  based  upon  reliable  experience,  with  an  interest  assumption  not 
higher  than  four  per  cent  per  annum;  nor  until  it  shall  be  shown  to 
the  Commissioner  of  Insurance  and  Banking  by  the  sworn  statement  of 
the  treasurer  or  corresponding  officer  of  such  society  that  at  least  five 
hundred  applicants  have  each  paid  in  cash  at  least  one  regular  monthly 
payment  as  herein  provided  per  one  thousand  dollars  of  indemnity  to 
be  effected,  which  payments  in  the  aggregate  shall  amount  to  at  least 
twenty-five  hundred  dollars;  all  of  which  shall  be  credited  to  the  mor- 
tuary or  disability  fund  on  account  of  such  applicants  and  no  part  of 
which  may  be  used  for  expenses. 

Said  advanced  payments  shall,  during  the  period  of  organization,  be 
held  in  trust,  and  if  the  organization  is  not  completed  within  one  year 
as  hereinafter  provided,  returned  to  said  applicants. 

The  Commissioner  of  Insurance  and  Banking  may  make  such  exam- 
ination and  require  such  further  information  as  he  deems  advisable,  and 
upon  presentation  of  satisfactory  evidence  that  the  society  has  com- 
piled (complied)  with  all  the  provisions  of  law,  he  shall  issue  to  such 
society  a  certificate  to  that  effect.  Such  certificate  shall  be  prima  facie 
evidence  of  the  existence  of  such  society  at  the  date  of  such  certificate. 
The  Commissioner  of  Insurance  and  Banking  shall  cause  a  record  of 
such  certificate  to  be  made  and  a  certified  copy  of  such  record  may  be 
given  in  evidence  with  like  effect  as  the  original  certificate. 

No  preliminary  certificate  granted  under  the  provisions  of  this  sec- 
tion shall  be  valid  after  one  year  from  its  date,  or  after  such  further 
period,  not  exceeding  one  year,  as  may  be  authorized  by  the  Commis- 


INSURANCE  LAWS  OF  TEXAS.  183 

sioner  of  Banking  and  Insurance  upon  cause  shown;  unless  the  five 
hundred  applicants  herein  required  have  been  secured  and  the  organi- 
zation has  been  completed  as  herein  provided;  and  the  articles  of  in- 
corporation and  all  proceedings  thereunder  shall  become  null  and  void 
in  one  year  from  the  date  of  said  preliminary  certificate,  or  at  the 
expiration  of  said  extended  period,  unless  such  society  shall  have  com- 
pleted its  organization  and  commenced  business  as  herein  provided. 
When  any  domestic  society  shall  have  discontinued  business  for  the 
period  of  one  year,  or  has  less  than  four  hundred  members,  its  charter 
shall  become  null  and  void.  Every  such  society  shall  have  the  power 
to  make  a  constitution  and  by-laws  for  the  government  of  the  society, 
the  admission  of  its  members,  the  management  of  its  affairs  and  the 
fixing  and  readjusting  of  the  rates  of  contribution  of  its  members  from 
time  to  time;  and  it  shall  have  the  power  to  change,  alter,  add  to,  or 
amend  such  constitution  and  by-laws  and  shall  have  such  other  powers 
as  are  necessary  and  incidental  to  carrying  into  effect  the  object  and 
purposes  of  the  society.  (Id.,  Sec.  12.) 

Note. —  (1)  The  organizers  of  a  fraternal  beneficiary  association  and  to  whom 
a  preliminary  certificate  authorizing  them  to  solicit  members,  but  not  to  issue 
certificates  or  policies,  cannot  assign  their  rights  under  such  preliminary  certifi- 
cate to  other  parties,  nor  can  any  other  parties  than  those  named  in  the  prelim- 
inary certificate  perfect  the  organization  and  obtain  a  charter.  (Opinion  of 
Attorney  General,  July  25,  1913.) 

(2)  The  bond  mentioned  in  above  section  should  be  signed  and  acknowl- 
edged by  the  incorporafbrs  of  the  association  as  principal  and  should  be  made 
payable  to  the  Commissioner  of  Insurance  and  Banking.  (Opinion  of  Attorney 
General,  December  21,  1909.) 

Powers  Retained — Beincorporation — Amendments. 

504.  Any  society  now  engaged  in  transacting  business  in  this  State 
may  exercise,  after  the  passage  of  this  act,  all  of  the  rights  conferred 
thereby,  and  all  of  the  rights,  powers  and  privileges  now  exercised  or 
possessed  by  it  under  its  charter  or  articles  of  incorporation  not  incon- 
sistent with  this  act,  if  incorporated;  or  if  it  be  a  voluntary  associa- 
tion, it  may  incorporate  hereunder.     But  no  society  already  organized 
shall  be  required  to  reincorporate  hereunder,  and  any  such  society  may 
amend  its  articles  of  incorporation  from  time  to  time  in  the  manner 
provided  therein  or  in  its  constitution  and  laws,  and  all  such  amend- 
ments shall  be  filed  with  the  Commissioner  of  Insurance  and  Banking 
and  shall  become  operative  upon  such  filing,  unless  a  later  time  be 
provided  in  such  amendments  or  in  its  articles  of  incorporation,  con- 
stitution or  laws.     (Id.,  Sec.  13.) 

Mergers  and  Transfers. 

505.  No  domestic  society  shall  merge  with  or  accept  the  transfer 
of  the  membership  or  funds  of  any  other  society  unless  such  merger  or 
transfer  is  evidenced  by  a  contract  in  writing,  setting  out  in  full  the 
terms  and  conditions  of  such  merger,  or  transfer,  and  filed  with  the 
Commissioner  of  Insurance  and  Banking  of  this  State,  together  with  a 
sworn  statement  of  the  financial  condition  of  each  of  said  societies  by 
its  president  and  secretary,  or  corresponding  officers,  and  a  certificate 
of  such  officers,  duly  verified  under  oath  of  said  officers  of  each  of  the 


184  INSURANCE  LAWS  OF  TEXAS. 

contracting  societies,  that  such  merger  or  transfer  has  been  approved  by 
a  vote  of  two-thirds  of  the  members  of  the  supreme  legislative  or  gov- 
erning body  of  each  of  said  societies. 

Upon  the  submission  of  said  contract,  financial  statements  and  cer- 
tificates, the  Commissioner  of  Insurance  and  Banking  shall  examine 
the  same,  and  if  he  shall  find  such  financial  statements  to  be  correct 
and  the  said  contract  to  be  in  conformity  with  the  provisions  of  this 
section,  and  that  such  merger  or  transfer  is  just  and  equitable  to  the 
members  of  each  of  said  societies,  he  shall  approve  said  merger  or  trans- 
fer, issue  his  certificate  to  that  effect,  and  thereupon  the  said  contract 
or  merger  or  transfer  shall  be  of  full  force  and  effect.  In  case  such 
contract  is  not  approved,  the  fact  of  its  submission  and  its  contents 
shall  not  be  disclosed  by  the  Commissioner  of  Insurance  and  Banking. 
(Id.,  Sec.  14.) 

Annual  License. 

506.  Societies  which  are  now  authorized  to  transact  business  in  this 
State  may  continue  such  business  until  the  first  day  of  April  next 
succeeding  the  passage  of  this  act,  and  the  authority  of  such  societies 
may  thereafter  be  renewed  annually,  but  in  all  cases  to  terminate  on 
the  first  day  of  the  succeeding  April;  provided,  however,  the  license 
shall  continue  in  full  force  and  effect  until  the  new  license  be  issued 
or  specifically  refused.     For  each  such  license  or  renewal  the  society 
shall  pay  the  Commissioner  of  Insurance  and  Banking  ten  dollars.     A 
duly  certified  copy  or  duplicate  of  such  license  shall  be  prima  facie  eVi- 
dence  that  the  license   (licensee)   is  a  fraternal  benefit  society  within 
the  meaning  of  this  act.     (Id.,  Sec.  15.) 

Admission  of  Foreign  Society. 

507.  No  foreign  society  now  transacting  business,  organized  prior 
to  the  passage  of  this  act,  which  is  not  now  authorized  to  transact 
business  in  this   State,  shall  transact  any  business  herein  without  a 
license  from  the  Commissioner  of  Insurance  and  Banking.     Any  such 
society  shall  be  entitled  to  a  license  to  transact  business  within  this 
State  upon  filing  with  the  Commissioner  of  Insurance  and  Banking 
a  duly  certified  copy  of  its  charter  or  articles  of  association;  a  copy 
of  its  constitution  and  laws,  certified  by  its  secretary  or  corresponding 
officer;  a  power  of  attorney  to  the   Commissioner  of  Insurance   and 
Banking  as  hereinafter  provided;  a   statement  of  its  business  under 
oath   of  its  president   and   secretary   or  corresponding   officers   in   the 
form  required  by  the  Commissioner  of  Insurance  and  Banking,  duly 
verified  by  an  examination  made  by  the  supervising  insurance  official 
of  its  home  State  or  other  State  satisfactory  to  the  Commissioner  of 
Insurance  and  Banking  of  this  State;  a  certificate  from  the  proper 
official  in  its  home  State,  province  or  country  that  the  society  is  legally 
organized;  a  copy  of  its  contract,  which  must  show  that  benefits  are 
provided  for  by  periodical  or  other  payments  by  persons  holding  sim- 
ilar contracts;   and  upon   furnishing  the   Commissioner  of   Insurance 
and  Banking  such  other  information  as  he  may  deem  necessary  to  a 
proper  exhibit  of  its  business  and  plan  of  working,  and  upon  showing 
that  its  assets  are  invested  in  accordance  with  the  laws  of  the  State, 


INSURANCE  LAWS  OF  TEXAS.  185 

Territory,  district,  province  or  country  where  it  is  organized,  he  shall 
issue  a  license  to  such  society  to  do  business  in  this  State  until  the  first 
day  of  the  succeeding  April,  and  such  license  shall,  upon  compliance 
with  the  provisions  of  this  act,  be  renewed  annually,  but  in  all  cases 
to  terminate  on  the  first  day  of  the  succeeding  April;  provided,  how- 
ever, that  license  shall  continue  in  full  force  and  effect  until  the  new 
license  be  issued  or  specifically  refused.  Any  foreign  society  desiring 
admission  to  this  State  shall  have  the  qualifications  required  of  domestic 
societies  organized  under  this  act  and  have  its  assets  invested  as  re- 
quired by  the  laws  of  the  State,  Territory,  district,  country  or  province 
where  it  is  organized.  For  each  such  license  or  renewal  the  society 
shall  pay  the  Commissioner  of  Insurance  and  Banking  ten  dollars. 
When  the  Commissioner  of  Insurance  and  Banking  refuses  to  license 
any  society  or  revoke  its  authority  to  do  business  in  this  State,  he  shall 
reduce  his  ruling,  order  or  decision  to  writing  and  file  the  same  in  his 
office,  and  shall  furnish  a  copy  thereof,  together  with  a  statement  of 
his  reasons,  to  the  officers  of  the  society,  upon  request,  and  the  action 
of  the  Commissioner  of  Insurance  and  Banking  shall  be  reviewable  by 
proper  proceedings  in  any  court  of  competent  jurisdiction  within  the 
State;  provided,  however,  that  nothing  contained  in  this  or  the  pre- 
ceding section  shall  be  taken  or  construed  as  preventing  any  such  so- 
ciety from  continuing  in  good  faith  all  contracts  made  in  this  State 
during  the  time  such  society  was  legally  authorized  to  transact  business 
herein.  (Id.,  Sec.  16.) 

Note. —  ( 1 )  All  the  provisions  of  above  section  must  be  complied  with  before  a 
foreign  association  can  be  lawfully  licensed,  and  if  the  Commissioner  of  Insur- 
ance and  Banking  desires  further  information,  he  may  also  make,  or  have  an 
examination  made,  of  the  association  before  issuing  a  license  to  do  business  in 
Texas.  (Opinion  of  Attorney  General,  March  18,  1910.) 

(2)  A  foreign  fraternal  benefit  society,  seeking  admission  into  the  State, 
may  be  admitted,  although  its  funds  in  hand  do  not  equal  its  policy  valuations 
and  although  the  rate  of  premium  on  old  policies  is  not  in  compliance  with  the 
statutory  rate.  But  all  business  written  by  the  company  after  its  admission 
must  be  written  at  a  rate  of  premium  equal  to  or  in  excess  of  that  based  on 
the  National  Fraternal  Congress  Table  of  Mortality.  As  to  its  old  business, 
the  terms  of  Section  23a,  Chapter  113  of  the  Acts  of  the  Thirty-third  Legisla- 
ture, must  be  complied  with.  A  joint  life  fund  provided  by  a  fraternal  benefit 
society  policy,  by  which  one-half  of  the  amount  specified  in  the  policy  upon 
the  death  of  the  policyholder  becomes  "payable  to  the  first  and  oldest  out- 
standing certificate  in  force  in  the  same  division  and  class  of  members  of  cor- 
responding age,  etc.,"  is  unauthorized  by  the  laws  of  this  State,  is  what  is 
called  a  wagering  contract,  and  is  contrary  to  the  public  policy  of  this  State, 
and  a  society  writing  such  a  contract  cannot  be  admitted  to  transact  business 
in  Texas.  (Opinion  of  Attorney  General,  January  25,  1918.) 

Power  of  Attorney  and  Service  of  Process. 

508.  Every  society,  whether  domestic  or  foreign,  now  transacting 
business  in  this  State  shall,  within  thirty  days  after  the  passage  of  this 
act,  any  (and)  every  such  society  hereafter  applying  for  admission, 
shall,  before  being  licensed,  appoint  in  writing  the  Commissioner  of 
Insurance  and  Banking,  and  his  successors  in  office  to  be  its  true  and 
lawful  attorney  upon  whom  all  legal  process  in  any  action  or  proceed- 
ing against  it  shall  be  served,  and  in  such  writing  shall  agree  that  any 
lawful  process  against  it  which  is  served  upon  such  attorney  shall  be 


186  INSURANCE  LAWS  OF  TEXAS. 

of  the  same  legal  force  and  validity  as  if  served  upon  the  society  and 
that  the  authority  shall  continue  in  force  so  long  as  any  liability  re- 
mains outstanding  in  this  State. 

Copies  of  such  appointment  certified  by  said  Commissioner  of  Insur- 
ance and  Banking  shall  be  deemed  sufficient  evidence  thereof  and  shall 
be  admitted  in  evidence  with  the  same  force  and  effect  as  the  original 
thereof  might  be  admitted.  Service  shall  only  be  made  upon  such  at- 
torney, must  be  made  in  duplicate  upon  the  Commissioner  of  Insurance 
and  Banking,  or,  in  his  absence,  upon  the  person  in  charge  of  his  office, 
and  shall  be  deemed  sufficient  service  upon  such  society;  provided, 
however,  that  no  such  service  shall  be  valid  or  binding  against  any 
such  society  when  it  is  required  thereunder  to  file  its  answer,  ploding 
(pleading)  or  defense  in  less  than  thirty  days  from  the  date  of  mailing 
the  copy  of  such  service  to  such  society.  When  legal  process  against 
any  such  society  is  served  upon  said  Commissioner  of  Insurance  and 
Banking  he  shall  forthwith  forward  by  registered  mail  one  of  the 
duplicate  copies  prepaid  and  directed  to  its  secretary  or  corresponding 
officer.  Legal  process  shall  not  be  served  upon  any  such  society  except 
in  the  manner  provided  herein.  (Id.,  Sec.  17.) 

Place  of  Meeting — Location  of  Office. 

509.  Any   domestic  society  may  provide  that   the  meetings   of   its 
legislative  or  governing  body  may  be  held  in  any  State,  district,  prov- 
ince or  Territory  wherein  such  society  has  subordinate  branches,  and  all 
business  transacted  at  such  meetings  shall  be  as  valid  in  all  respects  as 
if  such  meetings  were  held  in  this  State;  but  its  principal  office  shall 
be  located  in  this  State.     (Id.,  Sec.  18.) 

No  Personal  Liability. 

510.  Officers  and  members  of  the  supreme,  grand  or  any  subordinate 
body  of  any  such  incorporated  society  shall  not  be  individually  liable 
for  the  payment  of  any  disability  or  death  benefit  provided  for  in  the 
laws  and  agreements  of  such  society;  but  the  same  shall  be  payable 
only  out  of  the  funds  of  such  society  and  in  the  manner  provided  by 
its  laws.     (Id.,  Sec.  19.) 

Waiver  of  the  Provisions  of  the  Laws. 

511.  The  constitution  and  laws  of  the  society  may  provide  that  no 
subordinate  body  nor  any  of  its  subordinate  officers  or  members  shall 
have  the  power  or  authority  to  waive  any  of  the  provisions  of  the  laws 
and  constitution  of  the  society,  and  the  same  shall  be  binding  on  the 
society  and  each  and  every  member  thereof  and  on  all  beneficiaries  of 
members. 

All  grand  lodges,  by  whatever  name  known,  whether  incorporated  or 
not,  holding  charters  from  any  supreme  governing  body,  which  were 
conducting  business  in  this  State  upon  the  passage  of  this  act,  as  a 
fraternal  beneficiary  association,  upon  what  is  known  as  the  separate 
jurisdiction  plan,  shall  be  treated  as  single  State  organizations,  and 
all  reports  required  by  the  provisions  of  this  act  shall  be  made  and 
furnished  by  the  officers  of  such  supreme  State  governing  body  and 
shall  embrace  and  contain  the  transactions,  liabilities  and  assets  of  such 
State  organization.  (Id.,  Sec.  20.) 


INSURANCE  LAWS  OF  TEXAS.  187 

Benefit  Not  Attachable. 

512.  No  money  or  other  benefit,  charity  or  relief  or  aid  to  be  paid, 
provided  or  rendered  by  any  such  society  shall  be  liable  to  attachment, 
garnishment  or  other  process,  or  be  seized,  taken,  or  appropriated  or 
applied  by  any  legal  or  equitable  process  or  operation  of  law  to  pay 
any  debt  or  liability  of  a  member  or  beneficiary  or  any  other  person 
who  may  have  a  right  thereunder,  either  before  or  after  payment.     (Id., 
Sec.  21.) 

Constitution  and  Laws — Amendments. 

513.  Every   society   transacting   business  under  this  act   shall   file 
with  the  Commissioner  of  Insurance  and  Banking  a  duly  certified  copy 
of  all  amendments  of,  or  additions  to  its  constitution  and  laws  within 
ninety  days  after  the  enactment  of  the  same.     Printed  copies  of  the 
constitution  and  laws,  as  amended,  changed,  or  added  to,  certified  by 
the  secretary  or  corresponding  officer  of  the  society,  shall  be  prima  facie 
evidence  of  the  legal  adoption  thereof.     (Id.,  Sec.  22.) 

Annual  Reports. 

514.  Every  society  transacting  business  in  this  State  shall  annu- 
ally, on  or  before  the  1st  day  of  March,  file  with  the  Commissioner  of 
Insurance  and  Banking  in  such  form  as  he  may  require,  a  statement 
under  oath  of  its  president  and  secretary  or  corresponding  officers,  of 
its  condition  and  standing  on  the  31st  day  of  December  next  preced- 
ing, and  of  its  transactions  for  the  year  ending  on  that  date,  and  also 
shall  furnish  such  other  information  as  the   Commissioner  of  Insur- 
ance and  Banking  may  deem  necessary  to  a  proper  exhibit  of  its  busi- 
ness and  plan  of  working.    The  Commissioner  of  Insurance  and  Bank- 
ing may  at  other  times  require  any  further  statement  he  may  deem 
necessary  to  be  made  relating  to  such  society. 

In  addition  to  the  annual  report  herein  required,  each  society  shall 
annually  report  to  the  Commissioner  of  Insurance  and  Banking  a 
valuation  of  its  certificates  in  force  on  December  31st  last  preceding, 
excluding  those  issued  within  the  year  for  which  the  report  is  filed,  in 
cases  where  the  contribution  for  the  first  year  in  whole  or  in  part  are 
used  for  current  mortality  and  expenses;  provided,  the  first  report  of 
valuation  shall  be  made  as  of  December  31,  1913,  such  report  of  val- 
uation shall  show,  as  contingent  liabilities  the  present  mid-year  value 
of  the  promised  benefits  provided  in  the  constitution  and  laws  of  such 
society,  under  certificates  the  subject  to  valuation;  and,  as  contingent 
assets,  the  present  mid-year  value  of  the  future  net  contributions  pro- 
vided in  the  constitution  and  laws  as  the  same  are  in  practice  actually 
collected.  At  the  option  of  any  society,  in  lieu  of  the  above,  the  val- 
uation may  show  the  net  value  of  the  certificates  subject  to  valuation 
hereinbefore  provided,  and  said  net  value,  when  computed  in  case  of 
monthly  contributions,  may  be  the  means  of  the  terminal  values  for  the 
end  of  the  preceding  and  of  the  current  insurance  years. 

Such  valuation  shall  be  certified  by  a  competent  accountant  or  actu- 
ary, or,  at  the  request  and  expense  of  the  society,  verified  by  the  actuary 
of  the  Department  of  Insurance  of  the  home  State  of  the  society,  and 
shall  be  filed  with  the  Commissioner  of  Insurance  and  Banking  within 
ninety  days  after  the  submission  of  the  last  preceding  annal  (annual) 


188  INSURANCE  LAWS  OF  TEXAS. 

report.  The  legal  minimum  standard  of  valuation  for  all  certificates, 
except  for  disability  benefits,  shall  be  the  National  Fraternal  Congress 
Table  of  Mortality,  as  adopted  by  the  National  Congress,  August  23, 
1899;  or,  at  the  option  of  the  society,  any  higher  table;  or,  at  its 
option,  it  may  use  a  table  based  upon  the  society's  own  experience  of 
at  least  twenty  years,  and  covering  not  less  than  one  hundred  thou- 
sand lives  with  interest  assumption  not  more  than  four  per  centum 
per  annum.  Each  such  valuation  report  shall  set  forth  clearly  and 
fully  the  mortality  and  interest  basis  and  the  method  of  valuation. 
Any  society  providing  for  disability  benefits  shall  keep  the  net  contri- 
butions for  such  benefits  in  a  fund  separate  and  apart  from  all  other 
benefit  and  expense  funds  and  the  valuation  of  all  other  business  of 
the  society ;  provided,  that  where  a  combined  contribution  table  is  used 
by  a  society  for  both  death  and  permanent  total  disability  benefits,  the 
valuation  shall  be  according  to  tables  of  reliable  experiences,  and  in 
such  cases  a  separation  of  the  funds  shall  not  be  required. 

The  valuation  herein  provided  for  shall  not  be  considered  or  regarded 
as  a  test  of  the  financial  solvency  of  the  society,  but  each  society  shall 
be  held  to  be  legally  solvet  (solvent)  so  long  as  the  founds  (funds)  in 
its  possession  are  equal  to  or  in  excess  of  its  matured  liabilities. 

Beginning  with  the  year  1914,  a  report  of  such  valuation  and  an 
explanation  of  the  facts  concerning  the  condition  of  the  society  thereby 
disclosed,  shall  be  printed  and  mailed  to  each  beneficiary  member  of 
the  society  not  later  than  June  1st  of  each  year;  or,  in  lieu  thereof 
such  report  of  valuation  and  showing  of  the  society's  condition  as 
thereby  disclosed,  may  be  published  in  the  society's  official  paper,  and 
the  issue  containing  the  same  mailed  to  each  beneficiary  member  of 
the  society.  The  laws  of  such  society  shall  .provide  that  if  the  stated 
periodical  contributions  of  the  members  are  insufficient  to  pay  all 
matured  death  and  disability  claims  in  full,  and  to  provide  for  the 
creation  and  maintenance  of  the  funds  required  by  its  laws  additional, 
increased  or  extra  rates  of  contribution  shall  be  collected  from  the 
members  to  meet  such  deficiency;  and  such  laws  may  provide  that,  upon 
the  written  application  or  consent  of  the  member,  his  certificate  may 
be  charged  with  its  proportion  of  any  deficiency  disclosed  by  valuation, 
with  interest  not  exceeding  five  per  centum  per  annum.  (Idv  Sec.  23.) 

Note. — All  business  written  by  a  foreign  fraternal  benefit  society  after  its 
admission  to  Texas  must  be  written  at  a  premium  equal  to  or  in  excess  of 
that  based  on  the  National  Fraternal  Congress  Table  of  Mortality.  As  to  its 
old  business  the  terms  of  Section  23a,  Chapter  113,  Acts  of  the  Thirty -third 
Legislature  (Sec.  515),  must  be  complied  with.  (Opinion  of  Attorney  Gen- 
eral, January  25,  1918.) 

Provisions  to  Insure  Future  Security. 

515.  If  the  valuation  of  the  certificates,  as  hereinbefore  provided, 
on  December  31,  1917,  shall  show  that  the  present  value  of  future  net 
contributions,  together  with  the  admitted  assets,  is  less  than  the  pres- 
ent value  of  the  promised  benefits  and  accrued  liability,  such  society 
shall  thereafter  maintain  said  financial  condition  at  each  succeeding 
triennial  valuation  in  respect  of  the  degree  of  deficiency  as  shown  in 
the  valuation  of  December  31,  1917.  If  at  any  succeeding  triennial 
valuation  such  society  does  not  show  at  least  the  same  condition,  the 


INSURANCE  LAWS  OF  TEXAS.  189 

Commissioner  of  Insurance  and  Banking  shall  direct  that  it  thereafter 
comply  with  the  requirements  herein  specified.  If  the  next  succeeding 
triennial  valuation  after  the  receipt  of  such  notice  shall  show  that  the 
society  has  failed  to  maintain  the  condition  required  herein,  the  Com- 
missioner of  Insurance  and  Banking  may,  in  the  absence  of  good  cause 
shown  for  such  failure,  institute  proceedings  for  the  dissolution  of  such 
society,  in  accordance  with  the  provisions  of  Section  24  of  this  act,  or 
in  the  case  of  a  foreign  society,  its  license  may  be  canceled  in  the 
manner  provided  in  this  act. 

Any  such  society,  shown  by  any  triennial  valuation,  subsequent  to 
December  31,  1917,  not  to  have  maintained  the  condition  herein  re- 
quired, shall,  within  two  years  thereafter,  make  such  improvement  as 
to  show  a  percentage  of  deficiency  not  greater  than  as  of  December  31, 
1917,  or  thereafter,  as  to  all  new  members  admitted,  be  subject,  so  far 
as  stated  rates  of  contributions  are  concerned,  to  the  provisions  of  Sec- 
tion 12  of  this  act,  applicable  in  the  organization  of  new  societies; 
provided,  that  the  net  mortuary  or  beneficiary  contributions  and  funds 
of  such  new  members  shall  be  kept  separate  and  apart  from  the  other 
funds  of  the  society.  If  such  required  improvement  is  not  shown  by 
the  succeeding  triennial  valuation,  then  the  said  new  members  may  be 
placed  in  a  separate  class  and  their  certificates  valued  as  an  independ- 
ent society  in  respect  of  contributions  and  funds.  (Id.,  Sec.  23a.) 

Same. 

516.  In  lieu  of  the  requirements  of  Sections  23  and  23a,  any  society 
accepting  in  its  laws  the  provisions  of  this  section  may  value  its  cer- 
tificates on  a  basis  herein  designated,  "accumulation  basis,"  by  credit- 
ing each  member  with  the  net  amount  contributed  for  each  year  and 
with  interest  at  approximately  the  next  (net)  rate  earned  and  by 
charging  him  with  his  share  of  the  losses  for  each  year,  herein  desig- 
nated "cost  of  insurance/'  and  carrying  the  balance,  if  any,  to  his 
credit.  The  charge  for  the  cost  of  insurance  may  be  accordingly  to  the 
actual  experience  of  the  society  applied  to  a  table  of  mortality  recog- 
nized by  the  law  of  this  State,  and  shall  take  into  consideration  the 
amount  at  risk  during  each  year,  which  shall  be  the  amount  payable  at 
death  less  the  credit  to  the  member,  except  as  specifically  provided  in 
its  articles  of  laws  or  contracts  no-  charge  shall  be  carried  forward  from 
the  first  valuation  hereunder  against  any  member  for  any  past  share  of 
losses  exceeding  the  contributions  and  credit.  If,  after  the  first  val- 
uation, any  member's  share  of  losses  for  any  year  exceeds  his  credit, 
including  the  contribution  for  the  year,  the  contribution  shall  be  in- 
creased to  cover  his  share  of  the  losses.  Any  such  excess  share  of  losses 
chargeable  to  any  member  may  be  paid  out  of  a  fund  or  contribution 
especially  created  or  required  for  such  purpose. 

Any  member  may  transfer  to  any  plan  adopted  by  the  society  with 
net  rates  on  which  tabular  reserves  are  maintained  and  on  such  transfer 
shall  be  entitled  to  make  such  application  of  his  credit  as  provided  in 
the  laws  of  the  society. 

Certificates  issued,  rerated  or  readjusted  on  a  basis  provided  for  ade- 
quate rates  with  adequate  reserves  to  mature  such  certificates  upon 
assumption  for  mortality  and  interest  recognized  by  the  law  of  this 
State  shall  be  valued  on  such  basis,  herein  designated  the  "Tabular 


190  INSURANCE  LAWS  OF  TEXAS. 

Basis";  provided,  that  if  on  the  first  valuation  under  this  section  a 
deficiency  in  reserve  shall  be  shown  for  any  such  certificate,  the  same 
shall  be  valued  on  the  accumulation  basis. 

Whenever  in  any  society  having  members  upon  the  tabular  basis  and 
upon  the  accumulation  basis,  the  total  of  all  costs  of  insurance  provided 
for  any  year  shall  be  insufficient  to  meet  the  actual  death  and  disabil- 
ity losses  for  the  year,  the  deficiency  shall  be  met  for  the  year  from  the 
available  funds  after  setting  aside  all  credits  in  the  reserve  or  from 
increased  contributions  or  by  an  increase  in  the  number  of  assess- 
ments applied  to  the  society,  as  a  whole  or  to  classes  of  members  as 
may  be  specified  in  its  laws,  savings  from  a  lower  amount  of  death  losses 
may  be  returned  in  like  manner  as  may  be  specified  in  its  laws.  If  the 
laws  of  the  society  so  provide,  the  assets  representing  the  reserves  of 
any  separate  class  of  members  may  be  carried  separately  for  such  class 
as  if  in  an  independent  society,  and  the  required  reserve  accummula- 
tion  (accumulation)  of  such  class,  so  set  apart  shall  not  thereafter  be 
mingled  with  the  assets  of  other  classes  of  the  society. 

A  table  showing  the  credits  to  individual  members  for  each  age  and 
year  of  entry  and  showing  opposite  each  credit  the  tabular  reserve  re-, 
quired  on  the  whole  life  or  other  plan  of  insurance  specified  in  the  con- 
tract, according  to  assumptions  for  mortality  and  interest  recognized 
by  the  law  of  this  State  and  adopted  by  the  society,  shall  be  filed  by  the 
society  with  each  annual  report  and  also  be  furnished  to  each  member 
before  July  1st  of  each  year. 

In  lieu  of  the  aforesaid  statement  there  may  be  furnished  fo  each 
member  within  the  same  time  a  statement  giving  the  credit  for  such 
member  and  giving  the  tabular  reserve  and  level  rate  required  for  a 
transfer  carrying  out  the  plan  of  insurance  specified  in  the  contract. 
No  table  or  statement  need  be  made  or  furnished  where  the  reserves  are 
maintained  on  the  tabular  basis.  For  this  purpose  individual  book- 
keeping accounts  for  each  member  shall  not  be  required  and  all  calcu- 
lations may  be  made  by  actuarial  methods. 

Nothing  herein  contained  shall  prevent  the  maintenance  of  such  sur- 
plus over  and  above  the  credits  on  the  accumulation  basis,  and  the  re- 
serves on  the  tabular  basis  pursuant  to  its  laws;  nor  be  construed  as 
giving  to  the  individual  member  any  right  or  claim  to  any  such  reserve 
or  credit  other  than  in  manner  as  expressed  in  the  contract  and  its 
laws;  nor  as  making  any  such  reserve  or  credits  a  liability  in  deter- 
mining the  legal  solvency  of  the  society.  (Id.,  Sec.  23b.) 

Examination  of  Domestic  Societies. 

517.  The  Commissioner  of  Insurance  and  Banking,  or  any  person 
he  may  appoint,  shall  have  the  power  of  visitation  and  examination  into 
the  affairs  of  any  domestic  society.  He  may  employ  assistants  for  the 
purpose  of  such  examination,  and  he,  or  any  person  he  may  appoint, 
shall  have  free  access  to  all  the  books,  papers  and  documents  that  re- 
late to  the  business  of  the  society,  and  may  summon  and  qualify  as  wit- 
nesses under  oath  and  examine  its  officers,  agents  and  employes  or  other 
person  in  relation  to  the  affairs,  transactions  and  conditions  of  the 
society. 

The  expense  of  such  examination  shall  be  paid  by  the  society  ex- 
amined upon  statement  furnished  by  the  Commissioner  of  Insurance 


INSURANCE  LAWS  OF  TEXAS.  191 

and  Banking  and  the  examination  shall  be  made  at  least  once  in  three 
years. 

Whenever  after  examination  the  Commissioner  of  Insurance  and 
Banking  is  satisfied  that  any  domestic  society  has  failed  to  comply  with 
any  provisions  of  this  act,  or  is  exceeding  its  powers,  or  is  not  carrying 
out  its  contracts  in  good  faith,  or  is  transacting  business  fraudulently; 
or  whenever  any  domestic  society,  after  the  existence  of  one  year  or 
more,  shall  have  a  membership  of  less  than  four  hundred  (or  shall  de- 
termine to  discontinue  business)  the  Commissioner  of  Insurance  and 
Banking  may  present  the  facts  relating  thereto  to  the  Attorney  General, 
who  shall,  if  he  deem  the  circumstance  warrant,  commence  an  action 
in  quo  warranto  in  a  court  of  competent  jurisdiction,  and  such  court 
shall  thereupon  notify  the  officers  of  such  society  of  a  hearing,  and  if 
it  shall  then  appear  that  such  society  should  be  closed,  said  society  shall 
be  enjoined  from  carrying  on  any  further  business  and  some  person 
shall  be  appointed  receiver  of  such  society  and  shall  proceed  at  once  to 
take  possession  of  the  books,  papers,  moneys  and  other  assets  of  the 
society,  and  shall  forthwith,  under  the  direction  of  the  court,  proceed 
to  close  the  affairs  of  the  society,  and  to  distribute  its  funds  to  those 
entitled  thereto. 

No  such  proceedings  shall  be  commenced  by  the  Attorney  General 
against  any  such  society  until  after  notice  has  been  duly  served  on  the 
chief  executive  officer  of  the  society  and  a  reasonable  opportunity  given 
to  it,  on  a  date  to  be  named  in  said  notice,  to  show  cause  why  such 
proceeding  should  not  be  commenced.  (Id.,  Sec.  24.) 

Application  for  Receiver,  Etc. 

518.  No  application  for  injunction  against  or  proceedings  for  the 
dissolution  of  or  the  appointment  of  a  receiver  for  any  such  domestic 
society  or  branch  thereof  shall  be  entertained  by  any  court  in  the  State 
unless  the  same  is  made  by  the  Attorney  General.     (Id.,  Sec.  25.) 

Examination  of  Foreign  Societies. 

519.  Commissioner  of  Insurance  and  Banking,  or  any  person  whom 
he  may  appoint,  may  examine  any  foreign  society  transacting  or  ap- 
plying for   admission  to   transact  business   in  this    State.     The   said 
Commissioner  of  Insurance  and  Banking  may  employ  assistants,  and 
he,  or  any  person  he  may  appoint,  shall  have  free  access  to  all  the 
books,  papers  and  documents  that  relate  to  the  business  of  the  society, 
and  may  summon  and  qualify  as  witnesses  under  oath  and  examine  its 
officers,  agents  and  employes  and  other  persons  in  relation  to  the  affairs, 
transactions  and  conditions  of  the  society.     He  may,  in  his  discretion, 
accept,  in  lieu  of  such  examination,  [an  examination]  of  the  Insurance 
Department  of  the  State,  territory,  district,  province  or  country  where 
such  society  is  organized.     The  actual  expense  of  examiners  making 
any  such  examination  shall  be  paid  by  the  society,  upon  statements 
furnished  by  the   Commissioner  of  Insurance  and   Banking.     If  any 
such  society  or  its  officers  refuse  to  submit  (to)  such  examination  or  to 
comply  with  the  provisions  of  the  section  relative  thereto,  the  authority 
of  such  society  to  write  new  business  in  this  State  shall  be  suspended, 
or  license  refused  until  satisfactory  evidence  is  furnished  the   Com- 


192  INSURANCE  LAWS  OF  TEXAS. 

missioner  of  Insurance  and  Banking  relating  to  the  condition  and 
affairs  of  the  society,  and  during  such  suspension  the  society  shall  not 
write  any  new  business  in  this  State.  (Id.,  Sec.  26.) 

Note. — See  note  under  Section  507. 

"No  Adverse  Publications. 

520.  Pending,  during  or  after  an  examination  or  investigation  of 
any  such  society,  either  domestic  or  foreign,  the  Commissioner  of  In- 
surance and  Banking  shall  make  public  no  financial  statement,  report 
or  finding,  nor  shall  he  permit  to  become  public  any  financial  state- 
ment, report  or  finding  affecting  the  status,  standing  or  rights  of  any 
such  society  until  a  copy  thereof  shall  have  been  served  upon  such 
society,  at  its  home  office,  nor  until  such  society  shall  have  been  afforded 
a  reasonable  opportunity  to  answer  any  such  financial  statement,  re- 
port of  (or)   finding,  and  to  make  such  showing  in  connection  there- 
with as  it  may  desire.     (Id.,  Sec.  27.) 

Revocation  of  License. 

521.  When  the  Commissioner  of  Insurance  and  Banking  on  investi- 
gation is  satisfied  that  any  foreign  society  transacting  business  under 
this  act  has  exceeded  its  powers,  or  has  failed  to  comply  with  any  pro- 
visions of  this  act,  or  is  conducting  business  fraudulently,  or  is  not  car- 
rying out  its  contracts  in  good  faith,  he  shall  notify  the  society  of  his 
findings,  and  state  in  writing  the  grounds  of  his  dissatisfaction,  and 
after  reasonable  notice  require  said  society,  on  a  date  named,  to  show 
cause  why  its  license  should  not  be  revoked.     If,  on  the  date  named  in 
said  notice,  such  objections  have  not  been  removed  to  the  satisfaction  of 
said  Commissioner  of  Insurance  and  Banking,  or  the  society  does  not 
present  good  and  sufficient  reason  why  its  authority  to  transact  busi- 
ness in  this  State  should  not  at  that  time  be  revoked,  he  may  revoke  the 
authority  of  the  society  to  continue  business  in  this   State.     All  de- 
cisions and  findings  of  the  Commissioner  of  Insurance  and  Banking 
made  under  the  provisions  of  this  section  may  be  reviewed  by  proper 
proceedings  in  any  court  of  competent  jurisdiction,  as  provided  in  Sec- 
tion 16  (Sec.  507)  of  this  act.     (Id.,  Sec.  28.) 

Exemption  of  Certain  Societies. 

522.  Nothing  contained  in  this  act  shall  be  construed  to  affect  or 
apply  to  grand  or  subordinate  lodges  of  Masons,  Odd  Fellows  or  Knights 
of  Pythias  (exclusive  of  the  insurance  department  of  the  supreme  lodge 
Knights  of  Pythias)   and  the  Junior  Order  of  the  United  American 
Mechanics  (exclusive  of  the  beneficiary  degree  or  insurance  branch  of 
the  National  Council  Junior  Order  United  States  American  Mechanics) 
or  societies  which  limit  their  membership  to  any  one  hazardous  occupa- 
tion nor  to  similar  societies  which  do  not  issue  insurance  certificates  nor 
to  an  association  of  local  lodges  of  a  society  now  doing  business  in  this 
State  which  provides  death  benefits  not  exceeding  five  hundred  dollars 
to  any  one  person  or  disability  benefits  not  exceeding  three  hundred 
dollars  in  any  one  year  to  pay  one  person  or  both,  nor  to  any  contracts 
of  reinsurance  business  on  such  plan  in  this  State,  nor  to  domestic  so- 
cieties which  limit  their  membership  to  the  employes  of  a  particular 


INSURANCE  LAWS  OF  TEXAS.  193 

city  or  town,  designated  firm,  business  house  or  corporation,  nor  to 
domestic  lodges,  orders  or  associations  of  a  purely  religious,  charitable 
and  benevolent  description  which  do  not  provide  for  a  death  benefit  of 
more  than  one  hundred  dollars  or  for  disability  benefits  of  more  than 
one  hundred  and  fifty  dollars  to  any  person  in  one  year. 

The  Commissioner  of  Insurance  and  Banking  may  require  from  any 
society  such  information  as  will  enable  him  to  determine  whether  such 
society  is  exempt  from  the  provisions  of  this  act. 

Any  fraternal  benefit  society  heretofore  organized  and  incorporated 
and  operating  within  the  definition  set  forth  in  Sections  1,  2  and  3  of 
this  act,  providing  for  the  benefits  in  case  of  death  or  disability  result- 
ing solely  from  accidents,  but  which  does  not  obligate  itself  to  pay  death 
or  sick  benefits,  may  be  licensed  under  the  provisions  of  this  act  and 
shall  have  all  the  privileges  and  shall  be  subject  to  all  the  provisions 
and  regulations  of  this  act,  except  that  the  provisions  of  this  act  re- 
quiring medical  examinations,  valuations  of  benefit  certificates  and  that 
the  certificates  shall  specify  the  amount  of  benefits,  shall  not  apply  to 
such  society.  (Id,,  Sec.  29.) 

Note. —  ( 1 )  A  fraternal  benefit  society  chartered  and  operating  under  a  license 
of  the  Commissioner  of  Insurance  and  Banking  prior  to  the  enactment  of  the 
statute  of  1913,  governing  such  societies,  cannot  be  exempted  from  complying 
with  the  requirements  of  the  last  mentioned  statute  by  merely  reducing  the 
amount  of  its  benefits  below  $300  for  death  benefits  or  $500  for  disability  bene- 
fits in  one  year,  but  is  nevertheless  subject  to  said  statute  regardless  of  the 
amount  of  its  benefits.  The  exemption  of  certain  associations  under  Section  29 
of  said  Act  if  the  benefits  are  not  in  excess  of  the  above  amounts,  refers  only 
to  a  voluntary  unincorporated  association  and  not  to  a  corporation  already 
operating  under  a  charter  and  a  license.  (Opinion  of  Attorney  General,  June 
27,  1913.) 

(2)  A  fraternal  benefit  society  issuing  certificates,  which  are  in  effect  in- 
surance policies,  is  thereby  doing  an  insurance  business,  and  must  comply  with 
the  laws  governing  fraternal  benefit  societies,  including  the  provisions  requiring 
such  organizations  to  obtain  a  certificate  of  authority  to  do  such  business. 
(Opinion  of  Attorney  General,  July  8,  1913.) 

Taxation. 

523.  Every  fraternal  benefit  society  organized  or  licensed  under  this 
act  is  hereby  declared  to  be  a  charitable  and  benevolent  institution,  and 
all  of  its  funds  and  property  shall  be  exempt  from  all  and  every  State, 
county,  district,  municipal  and  school  tax,  other  than  taxes  on  real 
estate  and  office  equipment,  when  same  is  used  for  other  than  lodge 
purposes.     (Id.,  Sec.  30.) 

Local  Mutual  Aid  or  Burial  Associations  Exempt. 

524.  The  provisions  of  this  chapter  shall  not  apply  to  incorporated 
or  unincorporated  mutual  relief  or  benefits,  or  burial  associations,  oper- 
ating upon  the  assessment  plan,  whose  business  is  confined  to  not  more 
than  one  county  in  the  State  of  Texas,  or  to  a  territory  in  two  or  more 
adjacent  counties  included  within  a  radius  of  not  more  than  fifty  miles 
surrounding  the  city  or  town  in  which  its  principal  office  is  to  be  lo- 
cated, which  is  designated  in  its  charter  and  which  at  no  time  shall 
have  a  membership  exceeding  2000  members  which  are  hereby  denom- 
inated local  mutual  aid  associations;  provided,  that  such  associations 


194  INSURANCE  LAWS  OF  TEXAS. 

are  in  no  manner  directly  or  indirectly  connected,  federated  or  asso- 
ciated with  any  such  association  and  do  not  directly  or  indirectly  con- 
tribute to  the  expense  or  support  of  any  other  such  association,,  or  to 
the  officers,  promoters,  or  managers  thereof;  and,  provided,  that  no  per- 
son or  officer  shall  receive  from  said  association  any  payment  on  ac- 
count of  organization  or  other  expenses  or  salaries  who  is  not  a  bona 
fide  resident  of  the  county  or  area  in  which  such  association  is  domi- 
ciled. The  association  above  mentioned  shall  annually,  on  or  before 
March  1,  file  a  statement  with  the  Commissioner  of  Insurance  and 
Banking,  which  shall  be  signed  and  sworn  to  by  the  president,  secre- 
tary, and  treasurer,  or  the  officer  holding  positions  corresponding  thereto. 
Such  statement  shall  show  whether  the  association  has,  during  the  prer 
ceding  year,  done  any  business  outside  of  the  county  or  area  in  which 
it  is  domiciled,  and  shall  state  whether  or  not  said  association  is  asso- 
ciated, federated  or  directly  or  indirectly  connected  with  any  other, 
and  shall  show  what,  if  anything,  has  been  contributed  during  the  pre- 
ceding year  by  said  association,  or  the  members,  to  any  person  or  offi- 
cer, or  director  thereof  for  salaries,  commissions  or  promotion  expenses, 
and  the  name  and  residence  of  the  party  or  parties  receiving  the  same. 
The  Commissioner  of  Insurance  and  Banking  may,  at  his  option,  and 
it  shall  be  his  duty,  if  not  satisfied  with  said  statement,  to  demand 
other  and  additional  statements  and  examine  the  books,  papers,  and 
records  of  said  association,  either  himself  or  by  some  other  suitable 
person  authorized  by  him.  Should  it  appear  to  the  Commissioner  of 
Insurance  and  Banking  that  any  such  local  mutual  aid  association  is 
not  carrying  on  business  as  set  forth  in  this  article,  and  is  not  entitled 
to  the  exemption  therein  set  forth,  such  association  shall  be  subject  to 
and  comply  with  all  provision  of  this  chapter  as  a  fraternal  beneficiary 
association.  Every  such  local  association  claiming  to  be  entitled  to 
the  benefit  of  the  exemption  created  by  this  article  •  shall  plainly  state 
upon  its  certificates,  applications  and  all  advertising  matter,  in  a  con- 
spicuous manner,  that  said  association  is  a  local  mutual  aid  association 
or  same  shall  be  deemed  subject  to  all  provisions  of  this  chapter  con- 
cerning fraternal  beneficiary  associations.  (Acts  36th  Leg.,  Chap.  50, 
Sec.  1.) 

Note. —  ( 1 )  Every  corporation  which  issues  policies  of  insurance  must  comply 
with  the  insurance  laws  governing  insurance  corporations.  If  it  assumes,  as  a 
fraternal  benefit  society,  to  issue  indemnity  against  death,  accident  or  bad  health, 
for  a  stipulated  or  periodical  premium  or  assessment,  it  thereby  undertakes 
to  do  an  insurance  business  and  is  not  a  charitable  organization.  Such  a  con- 
cern must  comply  with  all  the  laws  regulating  fraternal  benefit  societies,  in- 
cluding the  obtaining  and  holding  a  certificate  of  the  Commissioner  of  Insur- 
ance and  Banking,  authorizing  it  to  engage  in  that  business.  (Opinion  of  At- 
torney General,  March  7,  1913.) 

(2)  Local  mutual  aid  associations  which  confine  their  business  to  a  single 
county  are  not  limited  as  to  the  number  of  members  one  such  association  may 
have.  Such  an  association  doing  business  in  more  than  one  county  and  within 
a  territory  of  not  more  than  fifty  miles  from  its  home  office,  must  limit  the 
number  of  its  members  to  not  exceeding  two  thousand.  (Opinion  of  Attorney 
General,  April  23,  1920.) 


INSURANCE  LAWS  OF  TEXAS.  195 

Penalties. 

525.  Any  person,  officer,  member  or  examining  physician  of  any 
society  authorized  to  do  business  under  this  act  who  shall  knowingly 
or  wilfully  make  any  false  or  fraudulent  statement  or  representation  in 
or  with  reference  to  any  application  for  membership,  or  for  the  pur- 
pose of  obtaining  money  from  or  benefit  in  any  society  transacting  busi- 
ness under  this  act,  shall  be  guilty  of  a  misdemeanor,  and  upon  con- 
virtion  thereof  shall  be  punished  by  a  fine  of  not  less  than  one  hundred 
dollars,  nor  more  than  five  hundred  dollars,  or  imprisonment  in  the 
county  jail  for  not  less  than  thirty  days,  nor  more  than  one  year,  or 
both,  in  the  discretion  of  the  court;  any  person  who  shall  wilfully  make 
a  false  statement  of  any  material  fact  or  thing  in  a  sworn  statement 
as  to  the  death  or  disability  of  a  certificate  holder  in  any  such  society, 
for  the  purpose  of  procuring  payment  of  a  benefit  named  in  the  cer- 
tificate of  such  holder  and  any  person  who  shall  wilfully  make  any  false 
statement  in  any  verified  report  or  declaration  under  oath  required  or 
authorized  by  this  act,  shall  be  guilty  of  perjury,  and  shall  be  proceeded 
against  and  punished  as  provided  by  the  statutes  of  this  State  in  rela- 
tion to  the  crime  of  perjury. 

Any  person  who  shall  solicit  membership  for,  or  in  any  manner  as- 
sist in  procuring  membership  in  any  fraternal  benefit  society,  not  li- 
censed to  do  business  in  this  State,  or  who  shall  solicit  membership  for, 
or  in  any  manner  assist  in  procuring  membership  in  such  society,  not 
authorized  as  herein  provided  to  do  business  as  herein  defined  in  the 
State,  shall  be  guilty  of  a  misdemeanor  and  upon  conviction  thereof 
shall  be  punished  by  a  fine  of  not  less  than  fifty  nor  more  than  two 
hundred  dollars. 

Any  person  who  solicits  for  or  organizes  lodges  of  such  association 
as  are  described  in  the  first  section  of  this  act  without  first  obtaining 
from  the  Commissioner  of  Insurance  and  Banking  a  certificate  of  au- 
thority showing  that  the  association  has  complied  with'  the  provisions 
of  this  act,  and  is  entitled  to  do  business  in  this  State,  shall  be  deemed 
guilty  of  a  misdemeanor  and  upon  conviction  shall  be  punished  by  a 
fine  of  not  less  than  one  hundred  dollars,  nor  more  than  two  hundred 
and  fifty  dollars,  or  by  imprisonment  in  the  county  jail  for  not  less 
than  three  nor  more  than  six  months,  or  by  both  such  fine  and  imprison- 
ment; provided,  the  provisions  of  this  section  shall  not  be  so  construed 
as  to  prohibit  any  member  or  members  of  a  local  or  subordinate  lodge 
from  soliciting  any  person  or  persons  to  become  a  member  of  any  local 
or  subordinate  lodge  already  in  existence;  and  providing,  further,  the 
provisions  of  this  section,  shall  not  apply  to  any  member  or  members  of 
any  local  or  subordinate  lodge  who  participate  in,  supervise  or  directs 
or  conducts  the  organization  or  establishment  of  any  local  or  subordi- 
nate lodge  within  the  limits  of  the  county  of  his  or  their  residence  or 
lodge  district.  All  certificates  of  authority  for  agents  or  solicitors  shall 
be  issued  by  the  Commissioner  upon  application  made  therefor  by  any 
of  the  general  officers  of  the  association,  or  by  any  agent  whom  the 
properly  authorized  governing  body  of  the  association  has,  by  resolution 
filed  with  the  Commissioner  of  Insurance  and  Banking,  duly  empow- 
ered to  make  such  application,  and  all  such  certificates  shall  be  revoked 
by  the  Commissioner  upon  the  request  of  the  association,  and  may  be 
revoked  for  cause  upon  like  ground,  and  in  like  manner  as  the  certifi- 


196  INSURANCE  LAWS  or  TEXAS. 

cates  of  authority  of  agents  for  life  insurance  companies  under  the 
laws  of  this  State.  All  such  certificates  shall  be  renewed  annually  and 
shall  expire  on  the  first  day  of  April  of  each  year,  and  a  fee  of  $1.00 
shall  be  paid  for  the  use  of  the  State  for  the  issuance  of  said  such 
certificate. 

Any  society  or  any  officer,  agent  or  employe  thereof  neglecting  or 
refusing  to  comply  x  with  or  violating  any  of  the  provisions  of  this  act, 
the  penalty  for  which  neglect,  refusal  or  violation  is  not  specified  in 
this  section,  shall  be  fined  not  exceeding  two  hundred  dollars  upon  con- 
viction thereof.  (Acts  33d  Leg.,  Chap.  113,  Sec.  32.) 

Repeal  of  Former  Acts. 

526.  Chapter  36,  Acts  of  the  First  Called  Session  of  the  Thirty- 
first  Legislature  and  Chapter  22,  Acts  of  the  Second  Called  Session  of 
the  Thirty-first  Legislature,  and  Chapter  92,  Acts  of  the  Regular  Ses- 
sion of  the  Thirty-second  Legislature,  and  all  other  laws  in  conflict 
with  this  act  are  hereby  repealed.  (Id.,  Sec.  33.) 


CHAPTER  XXIII. 


What  Companies  Are  Subject  to  the  Provisions  of  This  Act. 

527.  Every  private  corporation,  foreign  or  domestic,  organized  for 
profit,  which  is  now  attempting  or  shall  hereafter  attempt  to  increase 
its  capital  stock,  and  every  proposed  corporation  attempted  to  be  or- 
ganized which  shall,   directly  or  indirectly,   through  itself,  its  agents 
or  employes,  or  through  any  person  or  association  of  persons,  holding 
companies,  sales  companies  or  otherwise,  or  through  any  other  agents, 
sell  or  contract  to  sell  any  stock  of  such  corporation  or  proposed  cor- 
poration, upon  which  sale  or  proposed  sale  or  contracts  of  sale  any  part 
of  the  proceeds  derived  or  to  be  derived  therefrom  are  used  or  to  be 
used,  directly  or  indirectly  for  the  payment  of  any  commission,  promo- 
tion, organization  fee  or  other  expenses  incident,  directly  or  indirectly, 
to  the  sale  of  its  shares  of  stock,  except  attorney's  fees,  charter  fees, 
franchise  tax,  permit  fees  and  stationery  and  supplies,  shall  be  subject 
to  the  provisions  of  this  act.     (Acts  33d  Leg.,  1st  Called  Session,  Chap. 
32,  Sec.  1.) 

Applies  to  Mining,  Oil  or  Gas  and  Townsite  Corporations. 

528.  This  act  shall  also  apply  to  any  mining,  oil  or  gas  corpora- 
tion increasing  its  stock  or  proposed  mining,  oil  or  gas  corporation  at- 
tempting to  sell  stock  in  which  any  land  or  mineral  or  thing  of  value  is 
to  be  procured  from,  in  or  under  such  land  that  has  been  or  is  to  be 
placed  as  an  asset  with  or  in  the  corporation  or  proposed  corporation, 
whether  any  promotion  fee  is  charged  or  not,  and  to  any  townsite  cor- 
poration or  proposed  townsite  corporation.     (Acts  33d  Leg.,  1st  Called 
Session,  Chapter  32,  Sec.  2.) 


INSURANCE  LAWS  OF  TEXAS.  i97 

Filing   of  Statements  With   Secretary  of   State  or   Commissioner   Before 
Offering-  for  Sale — Filing  Fees. 

529.  Before  offering  for  sale  or  contracting  to  sell,  directly  or  indi- 
rectly, any  stock  of  such  proposed  corporation,  or  such  increased  stock 
of  any  existing  corporation,  or  before  selling  any  stock  in  any  townsite 
corporation  as  provided  in  Section  2,  such  corporation,  or  those  pro- 
moting or  having  charge  of  the  sale  of  stock  of  any  proposed  corpora- 
tion, shall  file,  under  oath,  in  the  office  of  the  Secretary  of  State,  where, 
under  the  law,  a  charter  would  be  filed  in  his  department,  or  in  the 
office  of  the   Commissioner  of  Insurance  and  Banking,  where,  under 
the  law,  a  charter  would  be  filed  in  'his  department,  together  with  a 
filing   fee   of   twenty   dollars,   the   following   document:      A   statement 
showing  in  full  detail  the  plan  upon  which  the  corporation  proposes  to 
increase  its  capital  stock  or  upon  which  the  promoters  or  those  having 
charge  of  the  sale  of  stock  of  any  proposed  corporation  proposes  to  sell 
its  stock  and  organize  the  corporation,  together  with  a  copy  of  all  the 
forms  of  contracts,  stock  (or  deeds,  if  the  same  shall  come  under  Sec- 
tion 2  hereof)  to  be  used  by  the  corporation  or  promoters,  or  those  hav- 
ing charge  of  the  sale  of  stocks  of  any  proposed  corporation  in  con- 
nection with  such  stock  sales.     The  statement  shall  further  show  the 
name,  location  and  domicile  of  such  corporation,  and  the  names  of  its 
officers  or  proposed  officers,  if  any,  or  promoters,  and  the  addresses  of 
all  the  parties;  the  amount  of  capital  stock  of  any  corporation  already 
organized,  the  proposed  increase,  or  the  proposed  capital  stock  of  the 
corporation  to  be  organized,  and  the  price  at  which  the  stock  is  pro- 
posed to  be  sold;  and  the  price  at  which  the  stock  is  proposed  to  be 
sold  shall  not  be  changed  without  filing  with  the  'Secretary  or  Commis- 
sioner, as  the  case  may  be,  a  statement  of  such  change,  which  shall  be 
subject  to  his  approval.     Any  such  corporation  or  promoters  of  such 
proposed  corporation  shall  furnish  the  Secretary  or  Commissioner  such 
other  information  as  may  be  necessary  or  proper  concerning  the  sale 
of  its  stock.     (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  3.) 

Filing  of  Copy  of  Charter  and  Other  Evidence,  When — Statement  of  Esti- 
mated Fees  and  Expenses. 

530.  If  it  shall  be  a  corporation  organized  under  the  laws  of  any 
other  jurisdiction,  it  shall  file  with  the  Secretary  or  Commissioner  a 
copy  of  its  charter,  and  such  other  evidence  of  its  authority  as  the  Sec- 
retary or  Commissioner  may  require. 

Said  statement  shall  also  show  the  commission,  promotion  fee  and 
other  estimated  incidental  expenses  proposed  to  be  charged  for  the  or- 
ganization of  such  proposed  corporation,  or  the  increase  in  the  capital 
stock  of  any  corporation  already  organized,  and  how  the  commissions 
or  fees  are  to  be  paid.  (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32, 
Sec.  3.) 

Mining,  Oil,  Gas  and  Townsite  Companies — Must  Give  Estimate  of  Actual 
Value  of  Property — Employment  of  Experts. 

531.  If  the  corporation  or  proposed  corporation  comes  under  Sec- 
tion 2  hereof,  the  officers  of  the  corporation,  or  the  promoters  of  the 
proposed  corporation,  shall  state  the  facts  upon  which  they  base  their 
estimate  of  the  actual  value  of  the  property  which  is  to  become  an  asset 


198  INSURANCE  LAWS  OF  TEXAS. 

of  the  corporation,  and  the  Secretary  or  Commissioner  shall  require 
such  proof  as  he  may  deem  proper  to  establish  the  actual  value  of  the 
property. 

The  Secretary  or  Commissioner  shall  have  the  right  to  employ  such 
experts  as  he  may  deem  necessary,  and  the  experts  shall  be  employed 
at  the  expense  of  the  corporation  or  promoters  of  a  proposed  corpora- 
tion. (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  3.) 

Filing"  of  Statements  Relating  to  Townsite  Corporations — Issue  of  Permit. 

532.  No  corporation  proposed  to  be  organized  for  the  purpose  of 
buying  or  selling  townsites  and  town  lots  shall  hereafter  be  granted 
a  charter  by  the  Secretary  of  State,  or  if  a  foreign  corporation  shall 
not  be  granted  a  permit  to  do  business  in  the  State  of  Texas  unless  the 
incorporators  of  said  proposed  corporation   or  officer  of   such   foreign 
corporation  shall  file  with  the  Secretary  of  State  each  and  every  docu- 
ment, contract  and  all  papers  referred  to  in  Section  3  of  this  act?  as 
well  as  a  general  statement  of  the  plan  of  its  proposed  townsite,  and  a 
general  statement  of  its  methods  of  advertising  same,  together  with  a 
sample  copy  of  its  advertising  literature,  and  no  charter  shall  be  granted 
any  corporation  unless  after  the  compliance  with  the  provisions  of  this 
act  and  in  the  judgment  of  the  Secretary  of  State,  such  business  of  any 
proposed   townsite   corporation   will   be   honestly   and   fairly   conducted 
both  to  the  corporation  and  to  the  public.     And  each  and  every  cor- 
poration in  this  State  now  existing  or  hereafter  organized  desiring  to 
engage  in  the  sale  of  townsite  lots  or  sites  shall,  prior  to  such  sale,  file 
with  the  Secretary  of  State  a  general  plan  of  said  proposed  lots  to  be 
sold,  as  well  as  a  copy  of  any  and  all  proposed  contracts  to  be  made 
with  the  public  in  the  sale  thereof,  and  a  general  statement  of  the  lit- 
erature proposed  to  be  issued,  and  all  matters  referred  to  in  Section  3 
hereof,  and  if  in  the  judgment  of  the  Secretary  of  State  said  sale  will 
be  conducted  both  honestly  and  fairly  to  the  corporation  and  to  the  pub- 
lic, a  permit  to  conduct  said  sale  shall  be  granted.    This  provision  shall 
not  be  construed  to  authorize  the  creation  of  any  corporation  for  any 
purpose  not  now  authorized  by  the  laws  of  this  State.     (Acts  33d  Leg., 
1st  Called  Session,  Chap.  32,  Sec.  3.) 

Secretary  or  Commissioner  Shall  Grant  or  Refuse  the  Permit. 

533.  The  Secretary  or  Commissioner,  upon  the  receipt  of  the  infor- 
mation as  provided  for  in  Section  3,  shall  grant  or  refuse  such  permit. 

If  the  Secretary  or  Commissioner  shall  decide  that  the  sale  of  stock 
will  be  fairly  and  honestly  conducted,  both  to  the  corporation  and  to 
the  public,  such  permit  shall  be  granted,  provided  that  the  commissions, 
promotion  and  other  incidental  expenses,  exclusive  of  the  exempted  ex- 
penses mentioned  in  Section  1  of  this  act,  shall  not  be  more  than 
fifteen  (15)  per  cent  of  the  price  at  which  such  stock  is  to  be  sold  as 
shown  by  the  application  or  amended  application.  (Acts  33d  Leg., 
1st  Called  Session,  Chap.  32,  Sec.  4.) 

Note. — Where  the  application  of  a  life  insurance  company  for  a  permit  to 
sell  an  increased  amount  of  its  capital  stock  exhibited  a  contract  between  the 
company  and  the  agent  employed  to  sell  the  increased  stock,  such  contract 
provided  that  the  said  agent  was  to  receive  as  compensation  the  sum  of  $250 
per  month  and  expenses  incurred  in  the  sale  of  the  stock,  together  with  ex- 


INSURANCE  LAWS  OF  TEXAS.  1^)9 

penses  in  moving  from  a  city  in  a  distant  State  to  a  city  in  the  State  of 
Texas.  Such  salary  and  expenses  were  to  be  paid  from  the  stock  sales  account, 
which  account  is  money  derived  from  a  deduction  of  $10  from  the  selling  price 
of  each  share  of  stock  sold,  the  price  being  $160  per  share,  $100  being  the 
par  value,  $50  surplus  and  $10  for  expense  of  selling.  Ten  dollars  per  share 
is  within  the  15  per  cent  which  the  law  allows  for  selling  the  stock,  and  if  the 
stock  sales  account,  being  said  $10  per  share  of  stock  sold,  were  sufficient  to 
pay  the  salary  and  expenses,  there  would  be  no  legal  objection  to  such  con- 
tract. But,  if  the  contract  further  provided  that  the  company  would  be 
authorized  "to  repay  itself  for  such  sums  advanced  by  it  from  time  to  time 
by  withdrawal  of  funds  to  the  credit  of  the  stock  sales  account,"  such  lan- 
guage indicates  that  the  company  out  of  its  general  assets  would  advance  the 
necessary  salary  and  expenses  if  there  should  be  nothing  to  the  credit  of  the 
stock  sales  account,  or  not  enough  to  meet  the  demands  on  same  under  the 
contract,  in  which  event  the  salary  and  expenses  actually  incurred  might  ex- 
ceed 15  per  cent  of  the  stock  actually  sold,  and  would  be  in  violation  of  law. 
In  such  a  contract  'the  language  of  same  should  clearly  show  that  the  salary 
and  expenses  paid  should  never  exceed  the  amount  to  the  credit  of  the  stock 
sales  account  accruing  on  a  basis  of  $10  per  share  of  stock  actually  sold,  or 
such  language  as  would  clearly  show  that  the  company  would  not  be  required 
to  pay  out  of  its  general  assets,  or  become  indebted  to  the  agent  selling  the 
stock,  in  excess  of  $10  per  share  of  stock  actually  sold.  (Opinion  of  Attorney 
General,  March  5,  1919.) 

This  Act  Shall  Not  Affect  Stock  Previously  Sold  or  Subscribed;  Unsold 
or  Unsubscribed  Part  of  It  Falls  Under  Condition  of  This  Act. 

534.  Provided,  that  where  any  proposed  corporation  has  already  sold 
its  stock,  or  a  part  thereof,  or  any  part  thereof  has  been  subscribed  at 
the  time  this  act  shall  take  effect,  this  act  shall  not  affect*  stock  previ- 
ously sold  or  subscribed  nor  any  contracts  made  in  reference  to  same; 
but,  if  any  of  the  stock  of  said  proposed  corporation  remains  unsold  or 
unsubscribed,  said  corporation  shall,  nevertheless,  be  entitled  to  a  per- 
mit upon  complying  with  the  other  conditions  of  this  act,  including  the 
future  sale  or  subscription  of  any  of  its  stock.      (Acts  33d  Leg.,   1st 
Called  Session,  Chap.  32,  Sec.  4.) 

Commissions  or  Promotion  Fee  Paid  to  Agent  or  Promoter,  When — Kind 
of  Payments  of  Stock. 

535.  The  commission  or  promotion  fee  shall  be  paid  to  the  agent 
or  promoter  as  the  stock  is  sold  by  him  and  paid  for  by  the  purchaser. 
The  stock  shall  be  considered  as  paid  for  when  paid  for  in  cash,  prop- 
erty or  labor.     (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  4.) 

Issue  of  Permit  Depends  on  Compliance  With  Certain  Requirements, 
Amongst  Them  the  Filing  of  a  Bond  Approved  by  Secretary  or  Com- 
missioner. 

536.  No  permit  shall  be  granted  unless  there  shall  appear  upon  the 
subscription  lists  and  contracts  of  such  corporation   or  proposed  cor- 
poration, in  bold  type,  the  amount  of  the  commissions,  promotion  fees 
and  other  estimated  expenses  incident  to  the  sale  of  such  stock,  and 
the  interest  which  the  officer,  agent,  employe  or  promoter  selling  or 
contracting  to  sell  such  stock  has  in  such  sale;  nor  shall  such  permit  be 
granted  until  the  applicants  therefor  have  entered  into  a  bond  for  not 
less  than  one  thousand  dollars   ($1000)   nor  more  than  one  hundred 
thousand  dollars  ($100,000),  the  same  to  be  fixed  by  the  Secretary  or 


200  INSURANCE  LAWS  OF  TEXAS. 

Commissioner  at  not  more  than  ten  per  cent  of  the  stock  proposed  to 
be  issued.  The  said  bond  shall  be  payable  to  the  Secretary  or  Commis- 
sioner as  the  case  may  be,  and  his  successor  in  office,  conditioned  that 
the  facts  set  forth  in  the  application  for  such  permit,  and  the  proof 
and  statement  offered  to  such  Secretary  or  Commissioner,  upon  which 
the  application  is  based,  are  true,  and  that  they  will  comply  with  the 
provision  of  this  act  in  the  sale  of  the  stock  of  such  corporation  or 
proposed  corporation.  Said  bond  may  be  made  with  individual  sureties 
or  a  surety  company  authorized  to  do  business  in  the  State  of  Texas, 
and  the  bond  shall  be  approved  by  the  Secretary  or  Commissioner. 
(Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  4.) 

Appeal  to  the  District  Court  of  Travis  County  When  Permit  Refused. 

537.  If  a  permit  shall  be  refused  by  the  Secretary  or  Commissioner 
the  parties  applying  therefor  may  bring  suit  in  the  district  court  of 
Travis   county,   Texas,  to  require   said   Secretary   or   Commissioner  to 
issue   such   permit.      (Acts   33d   Leg.,    1st    Called    Session,    Chap.    32, 
Sec.  5.) 

Suit  Upon  the  Bond — Amount  Recoverable — Requisition  of  a  New  Bond — 
Cancellation  of  Permit. 

538.  Any  person  who   shall  be  induced  to  purchase  any   stock  of 
any  corporation  or  proposed  corporation   by   the   officers,   agents,   em- 
ployes, promoters  or  trustees,  by  reason  of  any  misrepresentation  of  any 
material  fact  concerning  such  stock,  such  person  or  persons  shall  have 
the  right  to  bring  suit  upon  the  bond  above  provided  for,  and  such 
bond  shall  be  subject  to,  and  security  for,  such  person  so  purchasing 
the  stock;  provided,  that  such  person  shall  not  be  entitled  to  recover 
more  than  the  money  paid,  or  the  actual  value  of  the  property  given, 
or  the  labor  performed,  in  exchange  for  such  stock,  with  legal  interest 
from  the  date  of  the  payment  or  the  performance  of  the  services,  or  the 
transfer  of  the  property.    • 

One  or  more  recoveries  upon  such  bond  shall  not  vitiate  the  same, 
but  it  shall  remain  in  full  force  and  effect,  but  no  recoveries  upon  such 
bond  shall  ever  exceed  the  full  amount  of  same,  and  upon  suits  being 
filed  in  excess  of  the  amount  of  same,  the  Secretary  or  Commissioner 
may  require  a  new  bond,  and,  if  the  same  is  not  given  within  thirty 
days,  he  may  cancel  the  permit  herein  provided  for.  (Acts  33d  Leg., 
1st  Called  Session,  Chap.  32,  Sec.  6.) 

List  of  Authorized  Officers,  Agents  and  Employes  and  Its  Changes  Filed 
With  Secretary  or  Commissioner. 

539.  Whenever  any  permit  has  been  issued,  the  corporation  or  per- 
sons receiving  the  same  shall  file  a  list  of  the  names  of  their  or  its 
authorized  officers,  agents  or  employes,  and  the  postoffice  address  of 
each;  and,  in  case  of  the  change  of  any  of  its  officers,  agents  or  em- 
ployes, it  shall  file  a  list  of  such  changes  with  the  Secretary  or  Com- 
missioner.    (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  6.) 

All  Collected  Money  for  the  Sale  of  Stock  Shall  Be  Deposited  With  Bank. 

540.  All  money  or  other  things  of  value  collected  by  such  corpora- 
tion or  the  promoters  of  a  proposed  corporation,  for  the   sale  of  its 


INSURANCE  LAWS  OF  TEXAS.  201 

stock,  or  contract  for  the  sale  of  its  stock,  shall  be  deposited  by  said 
corporation  to  its  credit,  or  by  the  promoters  of  a  proposed  corporation, 
to  the  credit  of  its  proposed  officers  or  trustees,  with  the  exception  of 
the  amount  allowed  for  commissions,  promotion  fees  and  other  inci- 
dental expenses,  with  a  bank,  bank  and  trust  company  or  trust  com- 
pany incorporated  under  the  laws  of  this  State,  or  of  the  United  States. 
(Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  7.) 

All  Corporations  or  Proposed  Corporations  Must  Keep  a  Set  of  Books 
Open  for  Inspection  by  the  Authorities. 

541.  All  such  corporations,  and  the  organizers  or  trustees  of  pro- 
posed corporations,  shall  keep  a  set  of  books,  which  shall  show  the 
amount  of  money,  or  other  things  of  value  received  by  such  corporation 
or  proposed  corporation  from  the  sale  of  its  stock,  or  from  contracts  of 
sale  of  its  stock,  and  such  books  shall  show  the  number  and  amounts 
of  stock  sold  or  contracted  to  be  sold,  by  whom  sold,  and  to  whom  sold, 
or  contracted  to  be  sold,  and  the  postoffice  address  of  each.     Said  books 
shall  at  all  times  be  open  for  inspection  by  the  Secretary  or  Commis- 
sioner, or  his  duly  authorized  agent.     (Acts  33d  Leg.,  1st  Called  Ses- 
sion, Chap.  32,  Sec.  8.) 

Cause  for  Cancellation  of  Permit — Bight  to  Bring  Suit  in  the  District 
Court  of  Travis  County. 

542.  Whenever  the  Secretary  or  Commissioner  shall  have  informa- 
tion that  any  corporation,  or  the  promoters  of  the  proposed  corporation, 
its  officers,  agents  or  employes,  are  not  complying  with  the  terms  of 
this  act  in  the  sale  of  its  stock,  they  shall  notify  such  corporation,  or  its 
officers,  agents  or  employes  or  the  promoters  of  the  proposed  corpora- 
tion to  appear,  within  twenty  days,  and  show  cause  why  such  permit 
should  not  be  canceled,  and  after  the  hearing  such  Secretary  or  Com- 
missioner shall  have  the  right  to  cancel  such  permit  if  the  proof  shall 
show   that   such   corporation   or   proposed   corporation,   or   its   officers, 
agents  or  employes  are  not  complying  with,  the  terms  of  this  act,  but 
the  parties  or  corporation  holding  such  permit  shall  have  the  right  to 
bring  suit,  in  the  district  court  of  Travis  county,  Texas,  against  the 
Secretary  or  Commissioner  to  reinstate  such  permit  to  sell  stock.     (Acts 
33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  9.) 

Foreign  Corporations  Must  Show  50  Per  Cent  Paid-in  Capital — Does  Not 
Apply  to  Loan  and  Insurance  Corporations. 

543.  No  permit  to  sell  stock  shall  ever  be  issued  to  any  foreign  cor- 
poration which  has  not  at  the  time  of  making  application  for  permit  at 
least  fifty  per  cent  of  its  capital  stock  subscribed  and  paid  in,  provid- 
ing that  this  shall  not  apply  to  any  foreign  corporation  engaged  exclu- 
sively in  the  bus;ness  of  lending  money  in  this  State,  nor  to  any  in- 
surance company  that  is  required  by  law  to  obtain  a  permit  from  the 
Commissioner  of  Insurance  and  Banking.     (Acts  33d  Leg.,  1st  Called 
Session,  Chap.  32,  Sec.  10.) 

Foreign  Corporations  Shall  File  Po"wer  of  Attorney  Like  That  Provided 
in  Article  4773,  B.  S. — Duty  of  Secretary  or  Commissioner  in  Accept- 
ing Service. 

544.  Each   foreign   corporation   or  the  promoters   of   any   proposed 
foreign  corporation  desiring  to  sell  or  contract  to  sell  its  stock  in  this 


202  INSURANCE  LAWS  OF  TEXAS. 

State  shall  first  file  with  the  Secretary  or  Commissioner  a  like  power 
of  attorney  to  that  provided  for  life  insurance  corporations  in  Article 
4773,  Revised  Civil  Statutes  of  the  State  of  Texas  of  1911,  and  service 
may  be  had  upon  the  corporation  and  the  Secretary  or  Commissioner, 
as  the  case  may  be,  as  therein  provided  for,  and  the  Secretary  or  Com- 
missioner, as  the  case  may  be,  upon  receipt  of  such  process  as  is  therein 
provided  for,  shall  proceed  as  is  provided  for  him  to  do  in  Article  4774, 
Kevised  Civil  Statutes  of  the  State  of  Texas  of  1911,  and  the  Secretary 
or  Commissioner's  acts  and  conduct  in  regard  to  such  power  of  attor- 
ney, and  such  process  shall  be  the  same  as  is  provided  for  in  said 
Articles  4774  and  4773,  and  the  effect,  force  and  result  of  such  acts 
shall  be  the  same  as  therein  provided  for.  (Acts  33d  Leg.,  1st  Called 
Session,  Chap.  32,  Sec.  11.) 

Violation  of  This  Law — Misdemeanor — Imprisonment. 

545.  It  shall  hereafter  be  unlawful  for  any  officer,  agent  or  employe 
or  trustee,  or  holding  company,  or  sales  agents,  or  person,  or  associa- 
tion of  persons  in  this  State  to  sell,  or  offer  to  sell,  or  contract  to  sell, 
directly  or  indirectly,  for  such  concern,  any  stock  of  any  corporation 
or  proposed  corporation,  subject  to  this  act,  which  has  been,  proposed 
to  be,  is  now  being,  or  may  hereafter  be  organized  for  profit,  without 
first  complying  with   the   provisions   of   this   act,   and   any   person   so 
offending  shall  be  guilty  of  a  misdemeanor,  and  upon  conviction  shall 
be  fined  not  less  than  twenty-five  dollars  nor  more  than  two  thousand 
dollars,  and  in  addition  thereto  may  be  imprisoned  in  the  county  jail 
for  any  period  not  more  than  one  year,  or  by  both  such  fine  and  im- 
prisonment.    (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  12.) 

Subscribers  Must  Be  Refunded  at  the  Expiration  of  Two  Years — Exten- 
sion of  Time  May  be  Granted. 

546.  At  the  expiration  of  two  years  from  the  granting  of  a  permit 
under  this  act  if  the  proposed  corporation  has  failed  to  .organize,  then 
all  subscribers  must  be  refunded  the  amount  paid  to  the  promoter  or 
trustee;  provided,  however,  that  the  Secretary  or  Commissioner  may 
grant  an  extension  of  time  for  the  sale  of  securities.     (Acts  33d  Leg., 
1st  Called  Session,  Chap.  32,  Sec.  12a.) 

Cumulative  Power  of  This  Act. 

547.  This  act  shall  be  construed  to  be  cumulative  of  any  other  law 
or  laws  of  this  State.     (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32, 
Sec.  13.) 

Exemptions  of  This  Act  for  Certain  Corporations. 

548.  The  terms  of  this  act  shall  not  apply  to  -any  national  bank, 
nor  to  any  corporation  having  a  charter  granted  under  any  act  of  the 
Congress  of  the  United  States,  nor  to  any  State  bank,  bank  and  trust 
company  or  trust  company  organized  under  the  laws  of  this  State,  nor 
to  any  corporation  organized  under  the  Federal  Reclamation  Act,  ap- 
proved June  17,  1902,  or  the  regulations  established  by  the  Secretary  of 
the  Department  of  the  Interior  in  pursuance  thereof.     Nor  shall  the 
terms  of  this  act  apply  to  any  corporation  or  the  promoters  of  any  cor- 
poration organized  under  the  laws  of  Texas  which  does  not  sell  or  con- 


INSURANCE  LAWS  OF  TEXAS.  203 

tract  to  sell  its  stock  to  more  than  twenty-five  bona  fide  purchasers; 
provided,  it  does  not  act  as  the  agent  or  trustee,  holding  company  or 
sales  company  in  the  promotion  of  any  concern  which  is  included  under 
the  terms  of  this  act.  Nor  shall  this  act  apply  to  any  railroad  or  rail- 
way company  or  interurban  railroad  or  railway  company,  or  street  rail- 
road or  railway  company.  Nor  shall  this  act  apply  to  the  sale  of  stock 
of  a  corporation  by  a  bona  fide  owner  of  same,  who  had  in  good  faith 
bought  the  same,  and  who  in  the  purchase  and  sale  of  same  was  and 
is  not  acting  directly  or  indirectly  as  promoter  or  agent  of  such  cor- 
poration. Nor  shall  this  act  apply  to  a  bona  fide  stock  or  stock  broker 
in  the  sale  of  stock,  which  stock  has  been  by  such  corporation  sold 
and  issued  to  a  bona  fide  purchaser  prior  to  the  offering  of  same  for 
sale  by  such  broker;  provided,  that  such  purchaser  or  broker  was  not 
acting,  directly  or  indirectly,  as  promoter  of  such  corporation.  (Acts 
33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  14.) 

Quarterly   Deposit   of   Collected   Money — Examinations   Made   at   the    Ex- 
pense of  Corporations. 

549.  All  moneys  collected  under  the  terms  of  this  act  by  the  Sec- 
retary or  Commissioner  shall  be  quarterly  deposited  by  him  with  the 
State  Treasurer  and  credited  to  the  general  fund.     Whenever  the  Sec- 
retary or  Commissioner  shall  deem  it  necessary  to  examine  the  books 
of  any  corporation  or  proposed  corporation,  subject  to  the  provisions  of 
this  act,  or  investigate  its  financial  condition,  he  shall  do  so  at  the  ex- 
pense of  the  corporation  or  proposed  corporation  under  investigation, 
and  the  corporation  or  the  agents  of  the  corporation  or  proposed  corpo- 
ration being  investigated  shall  pay  to  the  Secretary  or  Commissioner,  or 
his  agent,  making  the  investigation  his  actual  expenses  and  seven  dol- 
lars and  fifty  cents  per  day  for  such  investigation,  which  said  expenses 
shall  be  paid  at  the  termination  of  such  investigation  by  the  concern 
investigated.     (Acts  33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  15.) 

Definitions. 

550.  Whenever  the  word  "Secretary'5  is  used  in  this  act  it  shall  be 
considered  to  mean   Secretary  of  the   State  of  Texas,   and  whenever 
"Commissioner"  is  used  in  this  act  it  shall  be  considered  to  mean  Com- 
missioner of  Insurance  and   Banking  of  the   State  of   Texas.      (Acts 
33d  Leg.,  1st  Called  Session,  Chap.  32,  Sec.  16.) 


CHAPTER  XXIV. 

ANTI-TRUST  LAW. 
Definition  of  a  Trust. 

551.  A  trust  is  a  combination  of  capital,  skill  or  acts  by  two  or 
more  persons,  firms,  corporations  or  associations  of  persons,  or  either 
two  or  more  of  them  for  either,  any  or  all  of  the  following  purposes: 

(1)  To  create  or  which  may  tend  to  create  or  carry  out  restrictions 
in  trade  or  commerce  or  aids  to  commerce  or  in  the  preparation  of 
any  product  for  market  or  transportation,  or  to  create  or  carry  out 
restrictions  in  the  free  pursuit  of  any  business  authorized  or  permitted 
by  the  laws  of  this  State. 


204  INSURANCE  LAWS  OF  TEXAS. 

(2)  To  fix,  maintain,  increase  or  reduce  the  price  of  merchandise, 
produce  or  commodities  or  the  cost  of  insurance  or  of  the  preparation 
of  any  product  for  market  or  transportation. 

(3)  To  prevent  or  lessen  competition  in  the  manufacture,  making, 
transportation,  sale  or  purchase  of  merchandise,  produce  or  commod- 
ities or  the  business  of  insurance,  or  to  prevent  or  lessen  competition 
in  aids  to  commerce,  or  in  the  preparation  of  any  product  for  market 
or  transportation. 

(4)  To  fix  or  maintain  any  standard  or  figure  whereby  the  price 
of  any  article  or  commodity  of  merchandise,  produce  or  commerce,  or 
the   cost   of  transportation,   or   insurance,   or   the   preparation   of   any 
product  for  market  transportation,  shall  be  in   any   manner  affected, 
controlled  or  established. 

(5)  To  make,  enter  into,  maintain,  execute  or  carry  out  any  con- 
tract, obligation  or  agreement  by  which  the  parties  thereto  bind,  or 
have  bound  themselves  not  to  sell,  dispose  of,  transport  or  to  prepare 
for  market  or  transportation   any  article   or  commodity,   or  to   make 
any  contract  of  insurance  at  a  price  below  a  common  standard  or  fig- 
ure, or  by  which  they  shall  agree  in  any  manner  to  keep  the  price 
of  such  article  or  commodity  or  charge  for  transportation  or  insur- 
ance, or  the   cost  of  the  preparation  of   any  product  for  market   or 
transportation  at  a  fixed  or  graded  figure,  or  by  which  they  shall  in 
any  manner  affect  or  maintain  the  price  of  any  commodity  or  article 
or  the  cost  of  transportation  or  insurance  or  the  cost  of  the  prepara- 
tion of  any  product  for  market   or  transportation  between   them,   or 
themselves  and  others,  to  preclude  a  free  and  unrestricted   competi- 
tion among  themselves  or  others  in  the  sale  or  transportation  of  any 
such  article  or  commodity  or  business  of  transportation  or  insurance 
or  the  preparation  of  any  product  for  market  or  transportation  or  by 
which  they  shall  agree  to  pool,  combine  or  unite  any  interest  they  may 
have  in  connection  with  the  sale  or  purchase  of  any  article  or  com- 
modity or  charge  for  transportation   or  insurance  or  charge  for  the 
preparation  of  any  product  for  market  or  transportation  whereby  its 
price  or  such  charge  might  be  in  any  manner  affected. 

(6)  To   regulate,  fix  or  limit  the   output  of  any  article  or  com- 
modity which  may  be  manufactured,  mined,  produced  or  sold,  or  the 
amount  of  insurance  which  may  be  undertaken,  or  the  amount  of  work 
that  may  be  done  in  the  preparation  of  any  product  for  market  or 
transportation. 

(7)  To  abstain  from  engaging  in  or  continuing  business  or  from 
the  purchase  or  sale  of  merchandise,  produce  or  commodities  partially 
or  entirely  within  the  State  of  Texas,  or  any  portion  thereof.     (R.  S., 
Art.  7796.) 

Note. —  ( 1 )  Three  insurance  companies  may  make  a  contract  between  them- 
selves to  reinsure  by  one  of  the  companies  in  the  others  of  a  part  of  the  busi- 
ness of  each,  respectively,  provided  the  rates  are  not  agreed  upon  and  fixed 
between  the  companies,  each  company  to  keep  in  the  business  in  its  own  name 
and  with  its  own  agents  and  in  constant  competition  with  the  others,  and  each 
to  be  left  free  to  reject  any  reinsurance  risk  not  satisfactory  to  it,  and  pro- 
vided further,  that  the  affairs  of  the  several  companies  are  not  brought  under 
such  common  management  or  control  as  tends  to  fix  or  maintain  cost  of  in- 
surance, or  lessen  competition,  or  to  fix  or  maintain  any  standard  affecting, 
controlling  or  managing  the  price  of  insurance,  and  there  is  no  agreement  to 


INSURANCE  LAWS  OF  TEXAS.  205 

pool,  combine  or  unite  any  interest  in  connection  with  the  sale  of  insurance, 
nor  to  regulate,  fix,  or  limit  the  amount  of  insurance  to  be  undertaken.  (Opin- 
ion of  Attorney  General,  June  27,  1905.) 

(2)  A  joint  contract  of  two  or   more   insurance   companies,   being  a  policy 
of  insurance  of  the  combined  companies,  issued  under  the  name  of  certain  under- 
writers,  is   a  violation  of  the  anti-trust   law.      (Opinion   of  Attorney  General, 
March  17,  1905.) 

(3)  A  corporation  organized  for  the  purpose  of  conducting  insurance  bureau 
having  as  one  of  its  purposes  the  right  to  "make  estimates  of  the  cost  of  carry- 
ing fire  insurance"  would  be  in  violation  of  the  anti-trust   law.      (Opinion   of 
Attorney  General,  December  21,  1905.) 

(4)  An  agreement  between  two  surety  companies  that  both  shall  hold  them- 
selves  jointly    and   equally    liable    under   each    and    every    liquor    dealer's    bond 
written  by  either  company  would  be  unlawful.      (Opinion  of  Attorney  General. 
February  6,  1906.)  -{ 

(5)  The  State  Insurance  Board  law  does  not  repeal,   affect  or   modify  the 
anti-trust  laws,  and,  notwithstanding  the  powers  of  the  State  Insurance  Board 
to   regulate  insurance  rates,   it  would  nevertheless   be   a  violation  of   the   anti- 
trust law  for  two  or  more  companies,  under  the  name  of  certain  underwriters, 
to  write  an  insurance  contract  or  policy  which  would  be  the  joint  contract  of 
such  companies.      (Opinion  of  Attorney  General,  April  6,  1911.) 

(6)  The  anti-trust   laws  of   this   State  apply   only   to   transactions   in   this 
State,  and  it  would  not  be  a  violation  of  the  anti-trust  laws  of  Texas  for  two 
or  more  insurance  companies,  though  chartered  in  Texas,  to  write  and  issue  a 
joint  policy  in  some  other  State.     (Attorney  General's  opinion,  April  11,  1911.) 

(7)  Relative  to  constitution  and  by-laws  of  proposed  organization  of  local 
chapter  or  boards  of  local  fire  insurance  agents   in  different   cities   and  towns 
in  Texas.     (Opinion  of  Attorney  General,  April  29,  1911.) 

(8)  The  life  insurance  companies  cannot  agree  upon  a  uniform  policy  at  a 
uniform  rate,  to  be  sold  for  the  benefit  of  the  students'  loan  fund  or  the  assured, 
because  it  would  controvert  the  anti-trust  law.     The  students'  loan  fund  could 
not  retain  the  proceeds  of  a  policy  in  its  favor,  having  no   insurable  interest 
in  the  life  of  the  assured.      (Opinion  of  Attorney  General,  December  11,  1914.) 

(9)  The  anti-trust  statutes  prohibit  the  formation  of  a  combination  on  the 
part  of  two  or  more  insurance  companies  for  the  purpose  of  jointly  executing 
bonds  guaranteeing  cotton  warehouse  receipts.      (Opinion  of  Attorney  General, 
February  3,  1916.) 

(10)  Where  two  insurance  companies,  both  of  which  are  authorized   to  do 
an   automobile   insurance  business,   issue  an   insurance  policy  executed   by  both 
companies,   under   the  terms   of  which  the   two   companies   do   not  assume   any 
joint  liability,  but  one  company  assumes  liability  for  certain  things  for  which 
the   other   company   is   not   liable,   while   the   other    assumes   liability   for   other 
certain  specified  risks  in  fhe  policy;  this  would  be  a  violation  of  the  anti-trust 
law,  which  prohibits  the  preventing  or  lessening  competition  in   the  insurance 
business.     Such  a  policy  jointly  executed  clearly  shows  that  the  companies  have 
agreed  in  dividing  the  risks,  one  company  carrying  one  portion  and  the  other 
a  separate  portion.     This  agreement  not  only  violates  the  law  which  prohibits 
the   preventing   or   lessening   of   competition,   but   is   also    contrary   to   the   pro- 
vision of  the  anti-trust  law  which  prohibits  an  agreement,  which  would,  in  effect, 
fix  or  maintain  any  standard  or  figure  whereby  the  cost  of  insurance  shall  be 
affected,  controlled  or  established.     The  Commissioner  should  not  approve  any 
contract  in  violation  of  the  statutes  of  Texas.      (Opinion  of  the  Attorney  Gen- 
eral, November  22,  1920.) 

Monopoly — Definition. 

552.  A  monopoly  is  a  combination  or  consolidation  of  two  or  more 
corporations  when  effected  in  either  of  the  following  methods : 

(1)  When  the  direction  of  the  affairs  of  two  or  more  corporations 
is  in  any  manner  brought  under  the  same  management  or  control  for 


206  INSURANCE  LAWS  OF  TEXAS. 

the  purpose  of  producing,  or  where  such  common  management  or  con- 
trol tends  to  create  a  trust,  as  defined  in  the  first  article  of  this  chapter. 
(2)  Where  any  corporation  acquires  the  shares  of  certificates  of 
stock  or  bonds,  franchise  or  other  rights,  or  the  physical  properties, 
or  any  part  thereof,  of  any  other  corporation  or  corporations,  for  the 
purpose  of  preventing  or  lessening,  or  where  the  effect  of  such  acqui- 
sition tends  to  affect  or  lessen  competition,  whether  such  acquisition 
is  accomplished  directly  or  through  the  instrumentality  of  trustees  or 
otherwise.  (R.  S.,  Art.  7797.) 

What  Constitutes  Conspiracy  in  Restraint  of  Trade. 

553.  Either  or  any  of  the  following   acts   shall   constitute   a   con- 
spiracy in  restraint  of  trade:  , 

(1)  Where  any  two  or  more  persons,  firms,  corporations  or  asso- 
ciations of  persons  who  are  engaged  in  buying  or  selling  any  articles 
of  merchandise,  produce  or  any  commodity,  enter  into  any  agreement 
or  understanding  to  refuse  to  buy  from  or  sell  to  any  other  person, 
firm,  corporation  or  association  of  persons  any  article  of  merchandise, 
produce  or  commodity. 

(2)  Where  any  two  or  more  persons,  firms,  corporations  or  asso- 
ciations of  persons  shall  agree  to  boycott  or  threaten  to  refuse  to  buy 
from  or  sell  to  any  person,  firm,  corporation  or  association  of  persons 
for  buying  from  or  selling  to  any  other  person,  firm,  corporation  or 
association  of  persons.     (R.  S.,  Art.  7798.) 

Declared  to  Be  Illegal. 

554.  Any  and  all  trusts,  monopolies  and  conspiracies  in  restraint 
of  trade,  as  herein  defined,  are  prohibited  and  declared  to  be  illegal. 
(R.  S.,  Art.  7799.) 

Shall  Forfeit  Charter. 

555.  Any  corporation  holding  a  charter  under  the  laws  of  the  State 
of  Texas,  which  shall  violate  any  of  the  provisions  of  this  chapter  shall 
thereby  forfeit  its  charter  and  franchise,  and  its   corporate  existence 
shall  cease  and  determine.     (R.  S.,  Art.  7800.) 

Attorney  General  Must  Institute  Suit  Upon  His  Own  Motion. 

556.  For  a  violation  of  any  of  the  provisions  of  this  chapter,  or 
any  anti-trust  laws  of  this  State,  by  any  corporation,  it  shall  be  the 
duty  of  the  Attorney  General  upon  his  motion  and  without  leave  or 
order  of  any  judge  or  court,  to  institute  suit  or  quo  warranto  proceed- 
ings in  Travis  county,  or  at  the  county  seat  of  any  county  in  the  State 
which  the  Attorney  General  may  select,  for  the  forfeiture  of  its  charter, 
rights'  and  franchises,  and  the  dissolution  of  its  corporate  existence; 
and  for  such  purposes,  venue  is  hereby  given  to  each  district  court  in 
the  State  of  Texas.     (R.  S.,  Art.  7801.) 

The  Corporation  to  Which  Defaulting  Corporation  May  Have  Transferred 
Its  Properties  Shall  Not  Be  Permitted  to  Transact  Business  in  Texas. 

557.  When  a  corporation   organized  under  the  laws  of  this   State 
shall  have  been  convicted  of  a  violation  of  any  of  the  provisions  of 
this  act,  and  its  charter  and  franchise  has  been  forfeited,  as  provided 


INSURANCE  LAWS  OF  TEXAS.  207 

in  Section  5,  no  other  corporation  to  which  the  defaulting  corporation 
may  have  transferred  its  properties  and  business,  or  which  has  assumed 
the  payment  of  its  obligations,  shall  be  permitted  to  incorporate  or  do 
business  in  Texas.  (R.  S.,  Art.  7802.) 

Every  Foreign  Corporation  Violating  Law  Denied  the  Bight  to  Transact 
Business — To  Be  Enjoined. 

558.  Every  foreign  corporation  violating  any  of  the  provisions  of 
this  chapter  is  hereby  denied  the  right,  and  is  prohibited  from  doing 
any  business  within  this  State,  and  it  shall  be  the  duty  of  the  Attorney 
General  to  enforce  its  provision  by  injunction  or  other  proceedings,  in 
the  district  court  of  Travis  county,  in  the  name  of  the  State  of  Texas. 
(R.  S.,  Art.  7803.) 

To  Control  Proceedings  Instituted  to  Forfeit  Charter. 

559.  The  provisions  of  Title  114,  Revised  Statutes  of  this  State  of 
1911,  to  prescribe   the   remedy   and   regulate  the   proceedings   by   quo 
warranto,  etc.,  shall,  except  in  so  far  as  they  conflict  herewith,  govern 
and  control  the  proceedings  when  instituted  to  forfeit  any  charter  under 
this  title.     (R.  S.,  Art.  7804.) 

The   Corporation   to   Which   Foreign   Corporation   May   Have   Transferred 
Its  Properties  Shall  Not  Be  Permitted  to  Do  Business. 

560.  When  any  foreign  corporation  has  been  convicted  of  a  viola- 
tion of  any  of  the  provisions  of  this  chapter,  and  its  right  to  do  busi- 
ness in  this  State  has  been  forfeited,  as  provided  in  Section  8  of  this 
act,  no  other  corporation  to  which  the  defaulting  corporation  may  have 
transferred  its  properties  and  business,  or  which  has  assumed  the  pay- 
ment of  its  obligations,  shall  be  permitted  to  incorporate  to  do  busi- 
ness in  Texas.     (R.  S.,  Art.  7805.) 

Penalties — Venue — Fees  of  Attorney  General. 

561.  Each  and  every  firm,  person,  corporation  or  association  of  per- 
sons, who  shall  in  any  manner  violate  the  provisions  of  this  chapter, 
shall,  for  each  and  every  day  that  such  violation  shall  be  committed 
or  continued,  forfeit  and  pay  a  sum  of  not  less  than  fifty  nor  more 
than  fifteen  hundred  dollars,  which  may  be  recovered  in  the  name  of 
the  State  of  Texas  in  the  district  court  of  any  county  in  the  State  of 
Texas,  and  venue  is  hereby  given  to  such  district  court;  provided,  that 
when  any  such  suit  shall  have  been  filed  in  any  county  or  jurisdiction 
thereof  acquired,  it  shall  not  be  transferred  to  any  other  county,  except 
upon  change  of  venue  allowed  by  the  court  and  it  shall  be  the  duty 
of  the  Attorney  General,  or  the  district  or  county  attorney  under  the 
direction  of  the  Attorney  General,  to  prosecute  for  the  recovery  of  the 
same;  and  the  fees  of  the  district  or  county  attorney  for  representing 
the  State  in  all  anti-trust  proceedings,  or  for  the  collection  of  penalties 
for  the  violation  of  the  anti-trust  laws  of  this  State,  shall  be  ten  per 
cent  of  the  amount  collected  up  to  and  including  the  sum  of  fifty  thou- 
sand dollars,  and  five  per  cent  on  all  sums  in  excess  of  the  first  fifty 
thousand  dollars,  to  be  retained  by  him  when  collected;  and  all  such 
fees  which  he  may  collect  shall  be  over  and  above  the  fees  allowed  under 
the  general  fee  bill;  provided,  that  the  provisions  of  this  chapter  as  to 


208  INSURANCE  LAWS  OF  TEXAS. 

the  fees  allowed  the  prosecuting  attorney  shall  not  apply  to  any  case  in 
which  judgment  has  heretofore  been  rendered  in  any  court,  nor  to  any 
moneys  to  be  hereafter  collected  upon  any  such  judgment  heretofore 
rendered  in  any  court,  whether  such  judgment  or  judgments  are  pend- 
ing upon  appeal  or  otherwise;  and  providud,  further,  that  the  district 
or  county  attorney  who  joins  in  the  institution  of  prosecution  of  any 
suit  for  the  recovery  of  penalties  for  a  violation  of  any  of  the  anti-trust 
laws  of  this  State,  who  shall,  previous  to  the  collection  of  such  penal- 
ties, cease  to  hold  office,  he  shall  be  entitled  to  an  equal  division  with 
his  successor  of  the  fee  collected  in  said  cause;  and  in  case  of  the  em- 
ployment of  special  counsel  by  any  such  district  or  county  attorney,  the 
contract  so  made  shall  be  binding  upon  such  prosecuting  officer  making 
such  contract  and  thereafter  retiring  from  office;  provided  further,  that 
in  case  any  suit  is  compromised  before  any  final  judgment  in  the  trial 
court  is  had,  then  the  fees  herein  provided  for  shall  be  reduced  one- 
half.  (E.  S.,  Art.  7806.) 

Contract  Void. 

562.  Any  contract  or  agreement  in  violation  of  the  provisions  of 
this  chapter  shall  be  absolutely  void  and  not  enforceable  either  in  law 
or  equity.     (R.  S.,  Art.  7807.) 

Additional  Penalties  and  Forfeitures. 

563.  And  in  addition  to  all  other  penalties  and  forfeitures  herein 
provided  for,  every  person  violating  the  provisions  of  this  chapter  shall 
be  further  punished  by  imprisonment  in  the  penitentiary  for  not  less 
than  one  nor  more  than  ten  years.     (P.  C.,  Art.  1466.) 

Act  of  Agent  Regarded  as  That  of  Corporation,  When. 

564.  In  prosecutions  for  the  violations  of  any  of  the  provisions  of 
this  chapter,  evidence  that  any  person  has  acted  as  the  agent  of  a  cor- 
poration in  the  transaction  of  its  business  in  this  State  shall  be  re- 
ceived as  prima  facie  proof  that  his  act  in  the  name,  behalf  or  inter- 
est of  the  corporation  of  which  he  was  acting  as  the  agent,  was  the 
act  of  the  corporation.     (P.  C.,  Art.  1467.) 

Duty  of  Justices  of  the  Peace  to  Have  Summoned  and  to  Have  Examined 
Witnesses  in  Relation  to  Violation  of  This  Act,  When. 

565.  Upon  the  application  of'  the  Attorney  General,  or  of  any  of 
his  assistants,  or  of  any  district  or  county  attorney,  acting  under  the 
direction  of  the  Attorney  General,  made  to  any  county  judge  or  any  jus- 
tice of  the  peace  in  this  State,  and  stating  that  he  has  reason  to  believe 
that  a  witness  who  is  to  be  found  in  the  county  of  which  such  justice  of 
the  peace  is  an  officer,  knows  of  a  violation  of  any  of  the  provisions  of 
the  preceding  chapter,  it  shall  be  the  duty  of  the  county  judge  or  of 
the  justice  of  the  peace  to  whom  such  application  is   made  to  have 
summoned  and  to  have  examined  such  witness  in  relation  to  violations 
of  any  of  the  provisions  of  this  chapter,  said  witness  to  be  summoned 
as  provided  for  in  criminal  cases.    The  said  witness  shall  be  duly  sworn 
and  the  county  judge  or  the  justice  of  the  peace,  as  the  case  may  be, 
shall  cause  the  statement  of  the  witness  to  be  reduced  to  writing  and 
signed  and  sworn  to  before  him,  and  such  sworn  statement  shall  be  de- 


INSURANCE  LAWS  OF  TEXAS.  209 

livered  to  the  Attorney  General,  his  assistants  or  the  district  or  county 
attorney  upon  whose  application  the  witness  was  summoned.  Should 
the  witness  summoned,  as  aforesaid,  fail  to  appear,  or  to.  make  state- 
ment of  the  facts  within  his  knowledge  under  oath,  or  to  sign  the  same 
after  it  has  been  reduced  to  writing,  he  shall  be  guilty  of  contempt  of 
court  and  may  be  fined  not  exceeding  one  hundred  dollars,  and  may  be 
attached  and  imprisoned  in  the  county  jail  until  he  shall  make  a  full 
statement  of  all  the  facts  within  his  knowledge  with  reference  to  the 
matter  inquired  about.  Any  person  who  shall  testify  before  any  county 
judge,  or  justice  of  the  peace,  as  provided  for  in  this  article,  or  who 
shall  testify  as  a  witness  for  the  State  in  the  course  of  any  statutory 
proceeding  to  secure  testimony  for  the  enforcement  of  the  provisions 
of  the  preceding  chapters,  or  in  the  course  of  any  judicial  proceeding 
to  enforce  the  provisions  of  said  chapter,  shall  not  be  subject  to  indict- 
ment or  prosecution  for  any  transaction,  matter  or  thing  concerning 
which  he  shall  so  give  evidence,  documentary  or  otherwise.  (R.  S.,  Art. 
7810.) 

Actions  to  Have  Precedence. 

566.  All  actions  authorized  and  brought  under  this  chapter  shall 
have  precedence,  on  motion   of  the  prosecuting   attorney  or  Attorney 
General,  or  all  other  business,  civil  and  criminal,  except  criminal  cases 
where  the  defendants  are  in  jail.     (R.  S.,  Art.  7808.) 

Must  Not  Form,  Aid  or  Become  a  Party  to  a  Trust — Applies  to  Trusts 
Outside  of  the  State,  When— Penalty. 

567.  If  any  person  shall  enter  into  an  agreement  or  understand- 
ing of  any  character  to  form  a  trust,  or  to  form  a  monopoly,  or  to 
form  a  conspiracy  in  restraint  of  trade,  as  these  offenses  are  defined 
by  this  chapter,  or  shall  form  a  trust,  monopoly  or  conspiracy  in  re- 
straint of  trade,  or  shall  be  a  party  to  the  formation  of  a  trust  or 
monopoly  or  conspiracy  in  restraint  of  trade,  or  shall  become  a  party 
to  a  trust  or  monopoly  or  conspiracy  in  restraint  of  trade,  or  shall  do 
any  act  in  furtherance  of,  or  aid  to,  such  trust  or  monopoly  or  con- 
spiracy in  restraint  of  trade,  he  shall  be  punished  by  imprisonment  in 
the  penitentiary  for  a  period  of  not  less  than  two  years  nor  more  than 
ten  years.     (P.  C.,  Art.  1470.) 

Person,   Member,  Agent,   Employe,   Etc.,   Operating  in  Violation  of  This 
Law — Penalty. 

568.  If  any  person  shall,  as  a  member,  agent,  employe,  officer,  di- 
rector or  stockholder  of  any  business,  firm,  corporation  or  association 
of  persons,  form,  in  violation  of  the  provisions  of  this  chapter,  or  shall 
operate  in  violation  of  the  provisions  of  this  chapter  any  such  busi- 
ness, firm,  corporation  or  association  formed  in  violation  of  this  chap- 
ter, or  shall  make  any  sale  or  purchase,  or  any  other  contract,  or  do 
business  for  such  business,  firm,  corporation  or  association,  or  shall  do 
any  other  act  which  has  the  effect  of  violating  or  aiding  in  the  viola- 
tion of  the  provisions  of  this  chapter,  or  shall,  with  the  intent  or  pur- 
pose of  driving  out  competition  or  for  the  purpose  of  financially  injur- 
ing competitors,  sell  within  the  State  at  less  than  cost  of  manufacture 
or  production,  or  sell  in  such  a  way  or  give  away  within  this  State 


210  INSURANCE  LAWS  OF  TEXAS. 

products  for  the  purpose  of  driving  out  competition  or  financially  in- 
juring competitors  engaged  in  a  similar  business,  or  give  secret  rebates 
on  such  purchase  for  the  purpose  aforesaid,  he  shall  be  punished  by 
confinement  in  the  penitentiary  for  a  period  of  not  less  than  two  years 
nor  more  than  ten  years.  (P.  C.,  Art.  1471.) 

Persons  Outside  State  Liable  to  Punishment,  When. 

569.  If  any  person  shall,  outside  of  this  State,  do  anything  which, 
if  done  within  this  State,  would  constitute  the  formation  of  a  trust  or 
monopoly  or  conspiracy  in  the  restraint  of  trade,  as  defined  in  this 
chapter,  and  shall  cause  or  permit  the  trust  or  monopoly  so  formed  by 
him  to  do  business  within  this   State,  or  shall  cause  or  permit  such 
trust,  monopoly  or  conspiracy  in  restraint  of  trade  to  have  any  opera- 
tion or  effect  within  this  State,  or  if  such  trust,  monopoly  or  conspiracy 
in  restraint  of  trade  having  been  formed  outside  of  this  State,  any  per- 
son shall  give  effect  to  such  trust,  monopoly  or  conspiracy  in  this  State, 
or  shall  do  anything  to  help  or  aid  it  doing  business  in -this  State,  or 
otherwise  violate  the  anti-trust  laws  of  this  State,  or  if  any  person  shall 
buy  or  sell,  or  otherwise  make  contracts  for  or  aid  any  other  business, 
firm,  corporation  or  association  of  persons  formed  or  operated  in  viola- 
tion of  the  provisions  of  this  chapter,   or  so  formed  or  operated   as 
would  be  in  violation  of  the  laws  of  this  State,  if  it  had  been  formed 
within  this   State,  shall  be  punished  by  confinement  in  the  peniten- 
tiary for  a  period  of  not  less  than  two  years  nor  more  than  ten- years. 
(P.  C.,  Art.  1472.) 

Persons,  Etc.,  Who  Have  Formed  Trusts,  Etc. — Penalty  Tor. 

570.  If  any  person,  or  employe  or  employes,  or  agent  or  agents, 
stockholder  or  stockholders,  officer  or  officers,  of  any  person,  firm,  asso- 
ciation of  persons  or  corporation,  now   doing  business  in  this   State, 
who  has  formed  a  trust  as  defined  in  this  chapter,  or  formed  a  monopoly 
as  defined  in  this  chapter,  or  has  formed  a  conspiracy  in  restraint  of 
trade,  as  defined  in  this  chapter,  or  shall  do  or  perform  any  act  of  any 
character  to  carry  out  such  trust,  monopoly  or  conspiracy  in  restraint 
of  trade,  such  person,  employe  or  employes,  agent  or  agents,  stockholder 
or  stockholders,  officer  or  officers,  shall  be  punished  by  confinement  in 
the  penitentiary  for  not  less  than  two  years  nor  more  than  ten  years. 
(P.  C.,  Art.  1473.) 

Criminal   Prosecution   in   Travis   County — Must   Not   Sell   for   Less   Than 
Cost  of  Production. 

571.  Criminal  prosecutions  under  this  chapter  may  be  conducted  in 
Travis  county,  Texas,  or  in  any  county  in  this  State  .wherein  a  trust, 
monopoly  or  conspiracy  in  restraint  of  trade  is  being  carried  on,  a  re- 
covery or  prosecution  against  any  person  for  any  violation  of  this  act, 
shall  not  bar  a  prosecution  of  or  recovery  against  any  other  person  or 
persons  for  the  same  offense.     (P.  C.,  Art.  1474.) 

Prosecutions  in  Any  County — Must  Notify  the  Attorney  General. 

572.  Prosecutions  under  this  chapter  may  be  instituted  and  prose- 
cuted by  any  county  or  district  attorney  of  this  State,  and  when  any 
such  prosecutions  have  been  instituted  by  any  county  or  district  attor- 


INSURANCE  LAWS  OF  TKN\-.  211 

ney,  such  officer  shall  forthwith  notify  the  Attorney  General  of  such 
fact;  and  it  is  hereby  made  the  duty  of  the  Attorney  General,  when  he 
shall  receive  such  notice,  to  join  such  officer  in  such  prosecution  and 
do  all  in  his  power  to  secure  the  enforcement  of  this  chapter.  (P.  C., 
Art.  1475.) 

For  Every  Conviction  the  State  to  Pay  the  District  or  County  Attorney — 
Fees  Divided,  When. 

573.  For  every  conviction  obtained  under  the  provisions  of  this 
chapter  the  State  shall  pay  to  the  county  or  district  attorney  in  such 
prosecution  the  sum  of  $250,  and  if  both  the  county  and  district  attor- 
ney shall  serve  together  in  such  prosecution,  such  fee  shall  be  divided 
between  them  as  follows:  $100  to  the  county  attorney  and  $150  to  the 
district  attorney.  (P.  C.,  Art.  1476.) 


CHAPTER  XXV. 

REGULATING  THE  BUSINESS  OF  INSURANCE  ISSUED  ON   LLOYDS  PLAN. 

Declaring    Who    May    Make    Any    Insurance    Except    Life    Insurance    on 
Lloyds  Plan. 

574.  That  individuals,  partnerships  or  associations  ot  individuals, 
hereby  designated  "underwriters"  are  authorized  to  make  any  insurance, 
except  life  insurance,  on  the  Lloyds  plan,  by  executing  articles  of  agree- 
ment expressing  their  purpose  so  to  do  and  complying  with  the  require- 
ments set  forth  in  this  Act.     (Acts  37th  Leg.,  Chap.  127,  Sec.  1.) 

Attorney  in  Fact  May  Execute  for  Underwriters  Articles  of  Agreement — 
Designates  His  Place  of  Office. 

575.  That  policies  of  insurance  may  be  executed  by  an  attorney  in 
fact  or  other  representatives,  hereby  designated  "attorneys"  authorized 
by  and  acting  for  such  underwriters  under  powers  of  attorney.     The 
principal  office  of  such  attorney  shall  be  maintained  at  such  place  as 
may  be  designated  by  the  underwriters  in  their  articles  of  agreement. 
(Acts  37th  Leg.,  Chap.  127,  Sec.  2.) 

Requisites  of  Application  for  License  to  Be  Filed  by  Attorney. 

576.  The  attorney  shall  file  with  the  Commissioner  of  Insurance  and 
Banking  a   verified   application   for  license   setting   forth   and   accom- 
panied by: 

(a)  The  name  of  the  attorney  and  the  title  under  which  the  busi- 
ness is  to  be  conducted,  which  title  shall  contain  the  name  Lloyds  and 
shall  not  be  so  similar  to  any  name  or  title  in  use  in  this  State  as  to  be 
likely  to  confuse  or  deceive. 

(b)  The  location  of  the  principal  office. 

(c)  The  kind  or  kinds  of  insurance  to  be  effected,  which  kinds  of 
insurance  may  be  as  follows : 

1.  Fire  insurance,  which  term  shall  be  construed  to  include  tornado, 
hail,  crop  and  floater  insurance. 

2.  Automobile  insurance,  which  term  shall  be  construed  to  include 


212  INSURANCE  LAWS  OF  TEXAS. 

fire,    theft,    transportation,    property    damage,    collision,    liability    and 
tornado. 

3.  Liability  insurance. 

4.  Marine  insurance. 

5.  Accident  and  health  insurance. 

6.  Burglary  and  plate  glass  insurance. 

7.  Fidelity  and  surety  bonds  insurance. 

8.  Any  other  kind  or  kinds  of  insurance,  not  above  specified,  the 
making  of  which  is  not  otherwise  unlawful  in  this   State,  except  life 
insurance. 

(d)  A  copy  of  each  form  of  policy  or  contract  by  which  such  in- 
surance is  to  be  effected. 

(e)  A  copy  of  the  form  of  power  of  attorney  by  virtue  of  which 
the  attorney  is  to  act  for  and  bind  the  several  underwriters  and  a  copy 
of  the  articles  of  agreement  entered  into  between  the  underwriters  them- 
selves and  the  attorney. 

(f)  The  names  and  addresses  of  all  underwriters,  whose  number 
shall  not  be  less  than  ten. 

(g)  A  financial  statement  showing  in  detail  the  assets  and  liabili- 
ties accumulated  and  incurred  and  the  income  and  disbursements  re- 
ceived and  made  by  the  attorney  for  the  underwriters. 

(h)  An  instrument  executed  by  each  and  all  of  the  underwriters 
specially  empowering  the  attorney  to  accept  service  of  process  for  each 
underwriter  in  any  action  on  any  policy  or  contract  of  insurance,  and 
an  instrument  from  the  attorney  to  the  Commissioner  of  Insurance 
and  Banking  delegating  the  attorney's  powers  in  this  respect  to  the 
Commissioner  of  Insurance  and  Banking.  (Acts  37th  Leg.,  Chap.  127, 
Sec.  3.) 

License  Fee. 

577.  That  upon  compliance  with  the  requirements  of  this  act,  and 
upon  a  showing  of  assets  as  provided  in  Section  5  hereof  the  Commis- 
sioner of  Insurance  and  Banking  shall,  upon  payment  of  a  fee  of  ten 
($10.00)  dollars  issue  a  license  to  any  attorney  applying  therefor  speci- 
fying the  kind  or  kinds  of  insurance  which  he  is  authorized  to  make 
and  containing  the  name  of  the  attorney,  the  location  of  his  principal 
office,  and  the  title  under  which  such  business  of  insurance  is  to  be  con- 
ducted.    Such  license  shall  continue  in  force  until  surrendered  by  the 
attorney  or  revoked  or  suspended  by  the  Commissioner  of  Insurance  and 
Banking  as  authorized  by  this  act.     (Acts  37th  Leg.,  Chap.  127,  Sec.  4.) 

Net  Assets,  Including-  the  Guarantee  Fund,  Must  Be  at  Least  $40,000 — 
If  More  Than  Two  Kinds  of  Insurance  Are  Transacted,  Net  Assets 
Must  Be  $10,000  Additional  for  Each  Additional  Kind  of  Insurance; 
if  Net  Assets  Amount  to  $100,000  Any  Kind  May  Be  Written  Except 
Life  Insurance. 

578.  That  no  attorney  shall  be  licensed  for  the  underwriters  at  a 
Lloyds  under  this  act,  unless  the  net  assets,  including  the  guarantee 
fund  provided  for  in  the  articles  of  agreement,  held  by  the  attorney, 
committee  of  underwriters,  trustee  or  other  officer,  as  provided  for  in 
the  articles  of  agreement,  shall  be  at  least  forty  thousand  ($40,000.00) 
dollars  in   cash   or   convertible   securities;   nor   shall   any   attorney   be 


INSURANCE  LAWS  OF  TEXAS.  213 

licensed  for  the  underwriters  at  a  Lloyds  to  transact  more  than  two  kinds 
of  insurance  as  defined  in  Section  3  hereof,  unless  the  net  assets  as 
above  defined  and  held  shall  be  as  much  as  ten  thousand  ($10,000.00) 
dollars  additional  for  each  additional  kind  of  insurance  designated  in 
the  application  for  license;  provided  that  if  the  underwriters  have  net 
assets  as  above  described  in  an  amount  equal  to  one  hundred  thousand 
($100,000.00)  dollars,  they  may  write  any  kind  of  insurance  that  may 
be  lawfully  written  in  this  State  except  life  insurance.  If  the  Com- 
missioner of  Insurance  and  Banking  shall  find  upon  any  examination 
of  a  Lloyds  that  the  net  assets  as  above  defined  are  less  than  the  amount 
required,  the  impairment  shall  be  made  good  within  thirty  days  from 
the  service  of  a  requisition  for  that  purpose  by  the  Commissioner  of  In- 
surance and  Banking  upon  the  attorney  for  the  underwriters.  If  any 
such  attorney  or  other  person  shall  make  any  advancement  to  make  good 
any  such  impairment,  the  claim  for  the  same  against  the  assets  of  the 
underwriters  shall-  be  deferred  to  claims  for  losses  under  policies  or  con- 
tracts of  insurance.  (Acts  37th  Leg.,  Chap.  127,  Sec.  5.) 

Shall  Be  Subject  to  Examination. 

579.  That  the  Commissioner  of  Insurance  and  Banking  may  make 
examinations  of  the  books  and  affairs  of  any  attorney  for  underwriters 
at  a  Lloyds,  the  expense  of  any  such  examination  to  be  borne  by  the 
underwriters  and   the   attorney   and   his   deputies   shall   facilitate   such 
examinations  and  furnish  all  information  which  the  Commissioner  of 
Insurance  and  Banking  may  reasonably  demand.     The   Commissioner 
of  Insurance  and  Banking  may  revoke  or  suspend  the  license  of  any 
attorney  in  case  of  breach  of  any  of  the  conditions  imposed  by  this  act 
and  upon  reasonable  notice  in  writing  to  the  attorney  so  that  he  may 
appear  and  show  cause  why  such  license  should  not  be  revoked  or  sus- 
pended.    (Acts  37th  Leg.,  Chap.  127,  Sec.  6.) 

Additional   or   Substituted    Underwriters   Bound    Same    as    Original    Sub- 
scribers. 

580.  That  additional  or  substituted  underwriters  shall  be  bound  in 
the  same  manner  and  to  the  same  extent  as  though  they  had  been  orig- 
inal subscribers  to  the  articles  of  agreement  and  power  of  attorney  on 
file  with  the  Commissioner  of  Insurance  and  Banking;  and  that  the 
acts  of  the  duly  appointed  deputy  or  substitute  attorney  of  any  attorney 
licensed  under  this  act  in  accepting  powers  of  attorney  from  under- 
writers and  in  making  and  issuing  policies  and  contracts  of  insurance 
and  in  doing  any  additional  acts  incident  thereto  shall  be  deemed  au- 
thorized by  the  license  issued  to  the  original  attorney.     (Acts  37th  Leg., 
Chap.  127,  Sec.  7.) 

No  Attorney  Shall  Assume  Any  One  Insurance  Risk  Exceeding  One-fifth 
of  the  Amount  of  the  Net  Assets. 

581.  That  no  attorney  for  underwriters  at  a  Lloyds  shall  assume 
any  one  insurance  risk  exceeding  one-fifth   of  the  amount  of  the  net 
assets  of  the  underwriters  as  above  defined  and  the  additional  liability 
assumed  by  the  individual  underwriters  in  the  articles  of  agreement  and 
in  the  policies  or  contracts  of  insurance,  unless  such  excess  shall  be 
promptly  reinsured.     (Acts  37th  Leg.,  Chap.  127,  Sec.  8.) 


214  INSURANCE  LAWS  OF  TEXAS. 

How  Action  May  Be  Brought;  Service  May  Be  Made  on  the  Commissioner 
of  Insurance  and  Banking;  Fee  for  Such  Service. 

582.  That  action  on  any  policy  or  contract  of  insurance  made  by 
the  attorney  for  the  underwriters  may  be  brought  against  the  attorney 
or  against  the  attorney  and  the  underwriters  or  any  of  them.     In  such 
action,  summons  and  process  shall  be  served  on  the  Commissioner  of 
Insurance  and  Banking  or  on  the  attorney  in  fact  and  when  so  served 
shall  have  the  same  force  and  effect  as  if  served  on  the  attorney  and  on 
each  underwriter  personally.     A  judgment  in  any  such  action  against 
the  attorney  or  against  any  of  the  underwriters  shall  be  binding  upon 
and  be  a  judgment  against  each  and  all  of  the  underwriters  as  their 
several  liabilities  may  appear  in  the  contract  of  insurance  on  which  the 
action  is  brought. 

Whenever  any  summons  or  other  process  is  served  on  the  Commissioner 
of  Insurance  and  Banking  the  same  shall  be  served  in  duplicate  and  the 
Commissioner  of  Insurance  and  Banking  shall  forthwith  by  registered 
mail  send  one  copy  of  the  summons  or  other  process  to  the  attorney  for 
the  underwriters  at  the  principal  office  designated  in  the  application 
for  license  or  latest  amendment  thereof.  The  party  commencing  any 
such  action  against  the  underwriters  at  a  Lloyds  and  securing  service 
of  process  in  this  manner  shall  at  the  time  of  such  service  pay  to  the 
Commissioner  of  Insurance  and  Banking  for  the  use  of  the  Department 
a  fee  of  two  ($2.00)  dollars,  which  he  shall  be  entitled  to  collect  as 
taxable  costs  in  the  action  if  he  shall  prevail.  (Acts  37th  Leg.,  Chap. 
127,  Sec.  9.) 

Commissioner  of  Insurance  and  Banking  May  Revoke  or  Suspend  Cer- 
tificate of  Authority  Upon  the  Violation  of  This  Act;  Penalty  for 
Operating  Without  Complying  With  This  Act. 

583.  That  all  such  underwriters,  their  attorneys,  agents  and  repre- 
sentatives transacting  the  business  of  insurance  in  this   State  on  the 
Lloyds  plan  shall  be  governed  and  regulated  by  the  provisions  of  this 
act  and  upon  violation  of  any  of  the  provisions  hereof  the  Commissioner 
of  Insurance  and  Banking  may  revoke  or  suspend  any  license  or  cer- 
tificate of  authority  issued  under  the  provisions  of  this  act,  and  any 
person  who,  as  principal  attorney,  agent,  broker  or  other  representative, 
shall  engage  in  the  business  contemplated  by  this  act,  or  any  variety  or 
part  thereof,  without  complying  with  the  requirements  hereof,  or  who 
shall  violate  any  of  its  provisions,  shall  be  deemed  guilty  of  a  mis- 
demeanor and  upon  conviction  shall  be  fined  in  an  amount  not  exceeding 
five  hundred  ($500.00)  dollars.     (Acts  37th  Leg.,  Chap.  127,  Sec.  10.) 

No  Other  Insurance  Law  of  This  State  Shall  Apply  Unless  Specifically  so 
Provided. 

584.  That  except  as  herein  provided  no  other  insurance  law  of  this 
State  shall  apply  to  insurance  on  the  Lloyds  plan  unless  it  is  specifically 
so  provided  in  such,  other  law  that  the  same  shall  be  applicable.     (Acts 
37th  Leg.,  Chap.  127,  Sec.  11.) 


INSURANCE  LAWS  OF  TEXAS.  215 

CHAPTER  XXVI. 

CO-OPERATIVE  SAVINGS  AND  CONTRACT  LOAN  COMPANIES. 

May  Be  Organized — Shall  File  Certified  Copy  of  Charter. 

585.  Co-operative  savings  and  contract  loan  institutions  organized 
under  the  general  corporation  laws  of  this  State  in  the  manner  therein 
provided,  and  all  such  institutions  as  may  be  organized  hereafter,  shall 
file  certified  copy  of  the  charter  issued  to  such  companies  by  the  Secre- 
tary of  State  with  the  Commissioner  of  Insurance  and  Banking.    (Sec.  1, 
Chap.  5,  1st  Called  Session,  34th  Leg.) 

Note. — Any  corporation,  whether  organized  in  this  State  or  elsewhere,  whose 
purposes  include  the  issuance  of  what  are  ordinarily  classed  as  contract  saving 
certificates,  whose  character  or  plan  is  similar  to  the  stock  of  a  building  and 
loan  association,  whereby  the  subscribers  pay  or  deposit  installments  at  stated 
intervals  until  the  maturity  of  such  contract  or  certificates  comes  within  the 
operation  of  Chapter  5,  Acts  of  the  First  Called  Session,  Thirty-fourth  Legis- 
lature, it  being  also  Chapter  25,  Title  25,  of  Complete  Texas  Statutes.  (Opinion 
of  Attorney  General,  June  21,  1921.) 

Commissioner  Has  Supervision. 

586.  All  such  corporations  shall  be  under  the  supervision  and  con- 
trol of  the  Commissioner  of  Insurance  and  Banking,  and  it  shall  be  his 
duty,  at  least  once  every  twelve  months  to  cause  the  books  of  such  cor- 
poration to  be  examined,  the  expense  of  such  examination  to  be  paid  by 
such  corporations  in  the  same  manner  as  now  required  by  law  for  the 
examination  of  insurance  companies.     (Sec.  2,  Chap.  5,  1st  Called  Ses- 
sion 34th  Leg.,  as  amended  by  Chap.  45,  4th  Called  Session,  35th  Leg.) 

Capital  Stock — How  Paid. 

587.  The  capital  stock  of  all  such  institutions  hereafter  organized 
shall  not  be  less  than  twenty-five  thousand  dollars,  and  not  less  than 
one-half  of  the  capital  stock  must  be  paid  in  in  actual  currency,  bank 
notes,  or  certified  checks;  while  the  remainder  may  be  paid  in  deferred 
payments,   payable   in   equal   or  greater   installments   annually;   for   a 
period  of  time  not  exceeding  two  years ;  but  the  deferred  payments  must 
be  evidenced  by  the  subscriber's  note  secured  by  the  paid-up  stock  cer- 
tificates issued  him  equal  in  amount  to  his  deferred  payments  and  by 
collateral  equal  to  said  amount  of  such  character  as  the  corporation 
shall  have  the  right  to  invest  its  funds  in,  which  said  notes  of  the  sub- 
scriber and  the  collateral  attached  thereto  must  be  examined  and  ap- 
proved by  the  Commissioner  of  Insurance  and  Banking  and  certified  by 
him  to  be  ample  and  sufficient.     (Sec.  3,  Chap.  5,  1st  Called  Session, 
34th  Leg.) 

Note. — A  corporation  of  this  kind  having  been  organized  more  than  two  years 
must  show  its  entire  capital  stock  to  have  been  fully  paid  in  money.  (Opinion 
of  Attorney  General,  June  21,  1921.) 

Powers  and  Authority. 

588.  Corporations  chartered  hereunder  shall  have  all  the  powers  of 
building  and  loan  associations  chartered  under  the  laws  of  this  State 
and  in  addition  shall  have  authority  to  engage  in  the  business  of  issuing 


216  INSURANCE  LAWS  OF  TEXAS. 

contracts  or  agreements,  whether  in  the  nature  of  bonds,  debentures, 
certificates,  or  otherwise,  providing  for  the  redemption  or  for  the  ful- 
filling of  such  contracts  or  agreements  by  the  accumulation  of  a  fund 
or  funds  by  the  contributions  made  by  a  subscriber  to  or  to  the  holders 
of  such  contracts  or  agreements;  or  providing  for  the  maturing  or  ful- 
filling of  such  contracts  or  agreements  in  the  order  of  their  issue  or  in 
series  or  in  some  other  fixed  or  arbitrarily  determined  order  or  manner; 
or  providing  for  the  payment  of  moneys  or  the  granting  or  giving  of 
any  consideration  of  any  money  or  personal  property,  real  or  mixed, 
greater  in  value  or  represented  to  be  greater  in  value  than  the  amount 
paid  in  upon  such  contracts  or  agreements,  together  with  the  actual  net 
earnings  accrued  and  accumulated  thereon ;  or  providing  for  the  loaning 
of  the  funds  contributed  by  the  subscribers  to  or  the  holders  of  such 
contracts  or  agreements  to  such  subscribers  or  holders  in  any  fixed  or 
arbitrarily  determined  order  or  manner;  or  for  the  making  of  loans  or 
advance  from  such  funds  to  or  for  such  subscribers  or  holders  to  be 
repaid  in  installments;  and  shall  have  the  right  to  place  or  sell  bonds, 
certificates  or  debentures  on  the  partial  payment  or  installment  plan 
(Sec.  4,  Chap.  5,  1st  Called  Session,  34th  Leg.) 

Investment  of  Capital — Shall  Make  Deposits  With  Commissioner. 

589.  All  corporations  hereafter  chartered  shall  invest  not  less  than 
thirty-three  and  one-third  per  cent  of  its  capital  stock  in  securities  of 
the  kinds  in  which  by  law  it  is  permitted  to  invest  or  loan  its  funds  and 
shall  deposit  the  same  with  the  Commissioner  of  Insurance  and  Banking 
for  the  common  benefit  of  all  the  holders  of  all  contracts  issued  by  it. 
All  savings  and  contract  loan  companies  as  herein  defined  shall  keep  on 
deposit  with  the  Commissioner  of  Insurance  and  Banking  at  all  times 
an  amount  equal  to  the  legal  reserve  required  by  this  act  on  all  its  out- 
standing contracts,  which  amount  shall  be  either  in  cash  or  in  such 
securities  as  it  is  permitted  by  law  to  invest  in?  which  said  deposit  of 
capital  stock  and  reserve  securities  shall  be  held  by  the  said  Commis- 
sioner in  trust  for  the  common  benefit  of  all  the  holders  of  contracts 
issued  by  such  corporations.     Any  such  company  may  deposit  the  law- 
ful money  of  the  United  States  in  lieu  of  the  securities  above  referred 
to  or  any  portion  thereof  and  may  also  for  the  purpose  of  such  deposit 
convey  to  said  Commissioner  in  trust  the  real  estate  in  which  any  por- 
tion of  said  capital  or  reserve  may  be  lawfully  invested,  and  in  such  case 
said  Commissioner  shall  hold  the  title  thereto  in  trust  until  other  securi- 
ties in  lieu  thereof  shall  be  deposited  with  him,  whereupon  he  shall  re- 
convey  the  same  to  such  company;  said  Commissioner  may  cause  any 
such  securities  or  real  estate  to  be  appraised  and  valued  prior  to  their 
being  deposited  with  or  conveyed  to  him  in  trust  as  aforesaid ;  the  reason- 
able expense  of  which  is  to  be  paid  by  the  company.     (Sec.  5,  Chap.  5, 
1st  Called  Session,  34th  Leg.) 

Commissioner  Shall  Certify  Registration  of  All  Contracts. 

590.  All  contracts  issued  by  any  such  company  shall  have  upon  their 
face  a  certificate  substantially  in  the  following  words:     "This  contract 
is  registered,  and  approved  securities  equal  in  value  to  the  legal  reserve 
hereon  are  held  in  trust  by  the  Commissioner  of  Insurance  and  Banking 


INSURANCE  LAWS  OF  TEXAS.  217 

of  the  State  of  Texas,"  which  certificate  shall  be  signed  by  the  Com- 
missioner and  sealed  with  the  seal  of  his  office.     (Id.) 

All  Contracts  Shall  Be  Approved  and  Marked  for  Identification. 

591.  All  contracts,  whether  bonds,  debentures,  or  whatsoever  form 
or  class,  shall  be  first  submitted  to  the  Commissioner  of  Insurance  and 
Banking  before  their  issuance  and  be  approved  by  him  as  fair  to  the 
purchaser  thereof,  to  the  corporation  and  to  its  stockholders,  and  .shall 
have  printed  thereon  some  appropriate  designating  letter  or  figure,  com- 
bination of  letters  or  figures  or  terms  identifying  the  particular  form 
of  contract,  together  with  the  year  of  the  adoption  of  such  form,  and 
whenever  any  change  or  modification  is  made  in  the  form  of  contract, 
the  designating  letters,  figures  or  terms  and  year  of  adoption  shall  be 
correspondingly  changed.      (Sec.  5,  Chap.  5,  1st  Called  Session,  34th 
Leg.) 

Commissioner  Shall   Register  Contracts   and   Make   Annual   Valuation   of 
Same. 

592.  The  Commissioner  of  Insurance  and  Banking  shall  prepare  and 
keep  such  registers  thereof  as  will  enable  him  to  commute  the  value  of 
such  contracts  at  any  time.    Upon  written  proof,  attested  by  the  presi- 
dent or  vice-president  and  secretary -of  the  company  which  shall  have 
issued  such  contracts  that  any  of  them  have  been  commuted  or  termi- 
nated, the  Commissioner  shall  commute  or  cancel  them  upon  his  register, 
and  until  such  proof  is  furnished,  all  registered  contracts  sjiall  be  con- 
sidered in  force  for  the  purpose  of  this  act.     The  net  value  of  every 
contract  according  to  the  standard  prescribed  herein  for  the  valuation 
of  such  contracts,  when  the  first  installment  shall  have  been  paid  thereon, 
less  the  amount  of  such  liens  as  the  company  may  have  against  it  (not 
exceeding  such  value)  shall  be  entered  opposite  the  records  of  each  con- 
tract in  the  register  aforesaid  at  the  time  such  record  is  made.    On  the 
first  day  of  January  of  each  year,  or  within  sixty  days  thereafter,  the 
Commissioner  shall  cause  the  contracts  of  each  company  chartered  here- 
under  or  operating  hereunder  to  be  carefully  valued,  and  the  actual  value 
thereof  at  the  time  fixed  for  such  valuation,  less  such  liens  as  the  com- 
pany may  have  against  it,  not  exceeding  such  valuation,  shall  be  entered 
upon  the  register  opposite  the  record  of  such  policy  or  bond,  and  the 
Commissioner  shall  furnish  a  certificate  of  the  aggregate  of  such  val- 
uation.    (Id.) 

Additional   Deposits   Shall   Be   Made   and   the   Amount   on   Deposit   Shall 
Always  Be  Equal  to  the  Value  of  the  Contracts. 

593.  Each   company   shall  make   additional   deposits   from   time   to 
time,  in  amounts  of  not  less  than  one  thousand  dollars,  and  of  such 
securities  as  are  permitted  by  this  act  to  be  deposited,  so  that  the  market 
value  of  the  securities  deposited  shall  always  be  equal  to  the  net  value 
of  the  contracts  issued  by  said  company,  less  such  items  as  the  company 
may  have  against  them  not  exceeding  such  net  value.     So  long  as  any 
company  shall  maintain  its  deposit  as  herein  prescribed  at  an  amount 
equal  to  or  in  excess  of  the  net  value  of  its  contracts,  it  shall  be  the 
duty  of  the  Commissioner  to  sign  and  affix  his  seal  to  the  certificate 


218  INSURANCE  LAWS  OF  TEXAS. 

before  mentioned  on  every  contract  presented  to  him  for  that  purpose 
by  any  such  company.     (Id.) 

Company  May  Increase  or  Withdraw  Deposits. 

594.  Any  company  depositing  under  the  provisions  of  this  act  may 
increase  its  deposits  at  any  time  by  making  additional  deposits  of  not 
less  than  one  thousand  dollars  of  such  securities  as  are  authorized  by 
this  chapter.     Any  such  company  whose  deposits  exceed  the  net  value 
of  the  contracts  which  it  has  in  force,  less  its  liens  thereon  (not  exceed- 
ing such  value)  may  withdraw  such  excess  and  it  may  withdraw  such 
securities  at  any  time  by  depositing  others  of  equal  value  and  of  the 
character  authorized  by  this  act  in  their  stead,  and  it  may  collect  in- 
terest, coupons,  rents,  and  other  income  on  the  securities  deposited,  as 
the  same  accrues.     (Id.) 

How  and  Where  Securities  Shall  Be  Kept. 

595.  The  securities  deposited  under  this  act  shall  be  placed  and  kept 
by  the  Commissioner  of  Insurance  and  Banking  of  the  State  in  some 
secure,  safety  deposit  fireproof  box  or  vault  in  the  city  or  town  in  or 
near  the  home  office  of  the  company,  and  the  officers  of  the  company 
shall  have  access  to  such  securities  for  the  purpose  of  detaching  interest 
coupons   and   crediting   payments   and  exchanging   securities   as   above 
provided,  under  such  reasonable  rules  and  regulations  as  the  Commis- 
sioner may  establish.     (Id.) 

Fees  for  Placing  Certificate  of  Commissioner  on  Contracts  and  Disposition 
of  Same. 

596.  Every  company  making  deposit  under  the  provisions  of  this 
act  shall  pay  to  the  Commissioner  of  Insurance  and  Banking  for  each 
certificate  placed  on  such  contracts  a  fee  of  ten  cents,  and  the  fee  so 
received  shall  be  disposed  of  by  the  said  Commissioner  as  follows: 

(1)  The  payment  of  the  rent  or  hire  of  the  safety  deposit  fireproof 
box  as  above  provided. 

(2)  Payment  of  the  services  of  a  competent  and  reliable  represent- 
ative of  said  Commissioner  to  be  appointed  by  him,  who  shall  have 
direct  charge  of  the  securities  and  the  safety  deposit  containing  same, 
and  through  whom  and  under  whose  supervision  the  company  may  have 
access  to  the  securities  for  the  purpose  above  provided.     The  sum  paid 
such  representative  shall  not  exceed  the  sum  of  one  hundred  dollars 
per  annum  for  each  such  company. 

(3)  The  balance  of  such  fees  shall  be  paid  to  or  be  deposited  with 
the  State  Treasurer  to  the  credit  of  the  general  fund.     (Sec.  7,  Chap.  5, 
1st  Called  Session,  34th  Leg.) 

Securities  in  Which  Capital  Is  Invested  May  Be  Included  in  Reserve  De- 
posit— Deposits  Shall  Be  Increased  as  Reserves  Increase — Company 
Cannot  Pay  Commissions  to  Officers  for  Writing  Contract. 

"  597.  Any  company  chartered  hereunder  may  include  as  a  part  of  its 
reserve  deposits  the  remaining  of  its  capital  stock,  if  the  same  has  been 
paid  in  and  invested  in  such  securities  as  such  company  is  permitted  by 
law  to  invest  in.  Deposits  of  securities  hereunder  to  the  value  of  the 
reserve  on  all  outstanding  contracts  shall  be  added  to  and  maintained 


INSURANCE  LAWS  OF  TEXAS.  21'J 

from  time  to  time  as  the  reserve  values  increase,  by  the  company  issuing 
such  contracts,  or  by  any  company  which  may  assume  them,  and  such 
securities  shall  be  held  by  the  Commissioner  and  his  successors  in  office 
in  trust  for  the  benefit  of  such  contracts  as  long  as  they  shall  remain 
in  force.  No  company  chartered  hereunder  shall  pay  or  contract  to 
pay,  directly  or  indirectly,  to  its  president,  vice-president,  secretary, 
treasurer  or  actuary,  any  commission  or  compensation  contingent  upon 
the  writing  of  contracts  or  upon  the  continuous  payment  of  installments 
upon  such  contracts,  and  should  any  company  violate  the  provisions  of 
this  section,  .it  shall  be  the  duty  of  the  Commissioner  of  Insurance  and 
Banking  to  revoke  its  certificate  of  authority  to  transact  business  until 
such  illegal  contract  has  been  abrogated  and  all  funds  paid  thereunder 
paid  into  the  company.  (Sec.  8,  Chap.  5,  Acts  1st  Called  Session,  34th 
Leg.) 

Officers  Shall  Give  Bond. 

598.  All  officers  of  the  company  having  charge  or  through  whose 
hands  pass  any  funds  or  securities  of  any  such  company  shall  give  bond 
to  the  company  in  the  form  approved  by  the  Commissioner  of  Insurance 
and  Banking,  and  in  such  amount  as  may  be  fixed  by  the  board  of  direc- 
tors to  be  not  less  than  five  per  cent  of  the  capital  stock  of  any  such 
corporation  and  in  no  event  less  than  one  thousand  dollars.     (Id.) 

By-Laws,  Contract  Forms  and  Advertising1  Matter  Shall  Be  Approved  by 
the  Commissioner  of  Insurance  and  Banking. 

599.  The  by-laws,  all  forms  of  contracts  and  all  literature  in  circular 
or  permanent  form,  which  undertake  to  state  the  benefits  and  advantages 
of  the  contract  to  the  investor  or  holder  thereof,  shall  be  first  submitted 
to  the  Commissioner  of  Insurance  and  Banking  for  his  examination  and 
approval  before  such  advertisements  are  promulgated  and  before  such 
contracts  are  issued. 

If  the  Commissioner  of  Insurance  and  Banking  shall  approve  such 
literature  or  contracts,  then  the  same  may  be  thereafter  issued  and  sold. 
If  he  should  disapprove  the  same,  such  company  may  institute  a  proceed- 
ing in  any  court  of  competent  jurisdiction  and  venue  to  review  his  action 
thereon.  (Sec.  9,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Impairment  of  Capital  Forfeits  Authority  to  Do  Business — Receiver  May 
Be  Appointed. 

600.  Any   such  company  chartered  hereunder  whose   capital   stock 
shall  become  impaired  to  the  extent  of  thirty-three  and  one-third  per 
cent  thereof,  computing  its  liabilities  according  to  the  terms  of  this  act, 
shall  make  good  such  impairment  within  sixty  days  by  reduction  of  its 
capital  stock  or  otherwise,  provided  its  capital  stock  may  never  be  re- 
duced below  the  minimum  required  by  this  act,  and  failure  to  make  good 
such  impairment  within  said  time  shall  forfeit  its  right  to  write  new 
business  in  this  State  until  such  impairment  shall  have  been  made  good ; 
and  provided  that  the  Commissioner  of  Insurance  and  Banking  may 
apply  to  any  court  of  competent  jurisdiction  for  the  appointment  of  a 
receiver  to  wind  up  the  affairs  of  the  company  when  its  capital  stock 
shall  become  impaired  to  the  extent  of  fifty  per  cent,  provided  also  that 
its  affairs  may  be  placed  in  the  hands  of  a  receiver  by  the  Commissioner 


220  INSURANCE  LAWS  OF  TEXAS. 

and  by  the  State,  acting  through  the  Attorney  General,  when  its  assets 
shall  not  equal  its  liabilities,  in  which  shall  be  included  its  outstanding 
debts,  and  its  contract  reserves,  plus  fifty  per  cent  of  its  capital  stock. 

(id.) 

Company  Must  Have  Certificate  of  Authority  to  Do  Business. 

601.  No  foreign  or  domestic  company  shall  transact '  business  under 
this  act  unless  it  shall  first  procure  from  the  Commissioner  of  Insurance 
and  Banking  a  certificate  of  authority  stating  that  the  requirements  of  the 
laws  of  this  State  have  been  fully  complied  with  by  it  and  authorizing 
it  to  do  business  in  this  State.     Such  certificate  of  authority  shall  expire 
on  the  last  day  of  February  in  each  year  and  shall  be  renewed  annually 
so  long  as  the  company  shall  continue  to  comply  with  the  laws  of  the 
State,  such  renewals  to  be  granted  upon  the  same  terms  and  conditions 
as  the  original  certificate.     (Sec.  10,  Chap.  5,  Acts  1st  Called  Session, 
34th  Leg.) 

Requisites  for  Obtaining  Authority  to  Do  Business. 

602.  In  order  to  obtain  a  certificate  of  authority  the  corporation 
must  deposit  with  the  Commissioner  certified  copy  of  its  articles  of  asso- 
ciation or  incorporation,  its  by-laws,  and  the  detailed  statement  of  its 
plans  for  doing  business,  together  with  copies  of  all  contracts  and  agree- 
ments proposed  to  be  used  in  the  conduct  of  its  business.     It  shall  be 
the  duty  of  the  Commissioner  to  investigate  and  thoroughly  examine 
into  all  such  matters  and  if  he  finds  that  the  law  has  been  complied  with 
and  that  the  business  proposed  to  be  done  is  not  in  conflict  with  laws 
and  Constitution  of  this  State,  he  shall  grant  a  certificate  authorizing 
such  corporation  to  do  business  and  such  contracts  and  plans  so  sub- 
mitted and  approved  shall  not  in  any  manner  be  changed  or  altered  until 
the  portion  changed  is  submitted  to  and  approved  by  the  Commissioner. 
(W.) 

Contract  May  Be  Surrendered  and  Cancelled  for  Cash  or  Paid  Up  Cer- 
tificate. 

603.  No  contract  or  agreement  by  any  corporation  chartered  or  doing 
business  hereunder  shall  be  forfeited  for  non-payment  but  upon  a  failure 
to  pay  upon  the  same  according  to  the  terms  thereof  for  a  period  of 
three  months,  the  same  may  be  cancelled  and  the  holder  thereof  shall  be 
credited  with  all  payments  made  to  the  reserve  fund  as  provided  in  Sec- 
tion 12  hereof  and  such  payments  and  such  credit  shall  be  payable  to 
the  holder  in  cash  or  paid-up  certificate  within  sixty  days  thereafter  at 
the  option  of  the  holder  provided  he  surrenders  at  the  time  of  demand 
such  cancelled  contract   or  agreement.      (Sec.    11,   Chap.   5,   Acts    1st 
Called  Session,  34th  Leg.) 

Conditions  Under  Which  Contract  May  Be  Withdrawn  Before  Maturity. 

604.  The  holder  of  any  contract  issued  hereunder  may  withdraw  the 
same  at  any  time  upon  ninety  days  written  notice  and  shall  be  entitled 
to  receive  thereafter  on  demand  the  full  amount  paid  into  the  3aid  loan 
or  reserve  fund,  provided  six  consecutive  monthly  payments   of   dues 
have  been  paid  on  the  contract,  in  addition  to  the  purchase  price  of  said 


INSURANCE  LAWS  OF  TEXAS.  221 

contract,  less  15  per  cent  if  the  same  is  withdrawn  after  six  months  and 
before  twelve  months.  If  the  same  is  withdrawn  after  one  year  and 
before  two  years  after  date  the  amount  paid  into  the  loan  and  reserve 
fund  less  ten  per  cent  of  such  amount,  and  if  withdrawn  after  two  years 
and  before  three  years  after  the  date  hereof  he  shall  receive  the  full 
amount  paid  into  said  reserve  fund,  less  five  per  cent,  and  if  withdrawn 
after  three  years  after  date  hereof,  he  shall  receive  the  full  amount  paid 
into  said  reserve  fund,  together  with  three  per  cent  interest  thereon; 
provided  that  the  certificate  holder  may  at  his  option  accept  a  paid-up 
certificate  of  contract  for  the  amount  to  the  credit  of  the  contract  in 
the  reserve  fund,  plus  three  per  cent  interest  to  the  date  of  withdrawal, 
which  certificate  shall  bear  five  per  cent  annual  interest,  and  be  payable 
not  later  than  the  maturity  date  of  the  original  contract.  (Sec.  12, 
Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Note.^A  savings  and  contract  loan  company  has  a  provision  in  its  contract 
issued  to  its  customers  to  the  effect  that  when  a  member  has  paid  the  required 
installments  for  six  consecutive  months,  he  shall  be  entitled  to  receive  a  loan 
out  of  the  loan  or  trust  fund,  provided  his  contract  has  been  reached  and  funds 
accumulated  for  a  loan  in  its  regular  numerical  order,  and  if  such  funds  are 
accumulated  prior  to  15  per  cent  of  the  face  value  of  the  contract  having  been 
paid  thereon,  the  member  shall  have  the  right,  at  his  option,  to  advance  the 
difference  required  to  make  up  said  15  per  cent,  and  immediately  secure  the  loan. 
In  connection  with  the  provision,  if  a  company  has  on  hand  more  than  $250,000, 
this  would  indicate  that  the  operation  of  such  contracts  does  not  enable  the 
members  to  procure  loans  as  rapidly  as  the  funds  accumulate  and  in  accordance 
with  the  privileges  guaranteed  them,  or  the  members  are  not  making  applica- 
tions for  loans  with  ordinary  rapidity.  Such  a  condition  would  indicate  that  a 
different  form  of  contract  should  be  used.  (Opinion  of  Attorney  General,  August 
8,  1921.) 

Liabilities  of  Contracts  and  Expense  Deduction  Denned. 

605.  The  liabilities  of  the  contracts  issued  by  any  corporation  trans- 
acting business  hereunder  shall  at  all  times  be  the  amount  paid  into 
the  loan  or  reserve  fund,  together  with  interest  at  the  rate  of  three  per 
cent  per  annum  thereon,  less  sixteen  and  two-thirds  per  cent  paid  to  loan 
or  reserve  fund,  which  may  be  deducted  for  expenses,  to  become  the 
actual  property  of  the  corporation,  eighty-three  and  one-third  per  cent 
of  amount  paid  into  loan  or  reserve  fund,  together  with  three  per  cent 
thereon  shall  constitute  the  certificate  or  contract  reserve  of  the  company, 
which  must  be  invested  in  approved  securities  to  be  deposited  with  the 
Commissioner  of  Insurance  and  Banking  as  herein  provided.     The  six- 
teen and  two-thirds  per  cent  of  all  sums  collected  and  here  referred  to  as 
the  expense  deduction  shall  become  the  absolute  property  of  the  corpora- 
tion, and  shall  be  carried  on  its  books  as  an  expense  and  profit  deduction. 
Provided,  however,  that  any  corporation  may  require  the  payments  into 
the  expense  fund  before  any  amount  shall  be  paid  into  the  reserve  fund 
of  a  loaning  charge  of  not  exceeding  two  and  four-tenths  per  cent  of  the 
face  of  the  loan  value  of  the  contract  as  the  expense  of  selling  and  book- 
ing the  contract.     (Sec.  13,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Dividends  Must  Be  Paid  From  Surplus  Profits  Only — Penalty  for  Viola- 
tion of  This  Requirement. 

606.  It  shall  not  be  lawful  for  any  company  organized  hereunder  to 
make  any  dividends,  except  from  surplus  profits  arising  from  its  busi- 


222  INSURANCE  LAWS  OF  TEXAS. 

ness,  and  in  estimating  such  profits  there  shall  be  reserved  therefrom  the 
lawful  reserve  on  all  unexpired  contracts,  and  also  the  amount  of  all 
unpaid  withdrawals  or  cancelled  certificates  and  all  other  debts  due  and 
payable  or  to  become  due  and  payable  by  the  company.  Any  dividends 
made  contrary  to  the  provisions  of  this  article  shall  subject  the  company 
making  them  to  a  forfeiture  of  its  charter,  and  the  Commissioner  of 
Insurance  and  Banking  shall  forthwith  revoke  its  certificate  of  author- 
ity; provided,  that  he  shall  give  such  company  at  least  ten  days  notice 
in  writing  of  his  intention  to  revoke  such  certificate,  stating  specifically 
the  reason  why  he  intends  to  revoke  the  same.  (Sec.  14,  Chap.  5,  Acts 
1st  Called  Session,  34th  Leg.) 

Securities  in  Which  Funds  of  Company  May  Be  Invested. 

607.     Corporations  chartered  hereunder  shall  invest  their  funds  in 
the  following  and  no  other  way : 

(1)  If  building  or  loan  association,  in  such  manner  and  in  such 
property  as  building  and  loan  associations  are  permitted  to  invest  their 
funds  under  the  building  and  loan  laws  of  this  State. 

(2)  In  the  purchase  of  lands  or  building  lots  and  erecting  build- 
ings and  improvements  thereon,  or  in  the  purchase  of  lands  and  improve- 
ments, shall  be  or  be  contracted  to  be  sold  to  a  certificate  holder  of  the 
company,  payable  by  the  periodical  contribution  of  the  certificates  of  the 
association  or  in  periodical  installments  of  such  period  of  time  as  shall 
be  agreed  upon  and  designated  in  the  by-laws  of  the  company;  at  the 
expiration  of  which  term  all  payments  having  been  made,  the  lands, 
dwelling  and  improvements  so  sold  and  conveyed  to   such   certificate 
holder  shall  become  the  property  of  the  grantee  discharged  from  further 
payment. 

(3)  In  loans  to  certificate  holders-  on  bonds  secured  by  mortgage 
which  shall  be  a  first  lien  on  real  estate  located  in  the  State  where  the 
contract  holder  resides  at  the  time  such  contract  is  issued  and  not  to 
exceed  sixty-five  per  cent  of  the  cash  value  thereof,  payable  in  certifi- 
cates of  the  company  or  by  periodical  installments;  except  where  any 
company  holds  a  mortgage  on  real  estate  which  is  a  first  lien,  such  com- 
pany may  increase  its  loan  thereon  and  secure  the  same  by  a  second  or 
subsequent  mortgage;  provided,  the  total  indebtedness  to  the  company, 
less  the  amount  paid  on  certificates  pledged  for  such  loan  shall  not 
exceed  sixty-five  per  centum  of  the  cash  value  of  the  real  estate  loaned 
on  and  all  mortgages  held  by  such  company  shall  be  prior  to  any  other 
incumbrance  on  said  real  estate. 

(4)  In  the  redemption  of  certificates  or  contracts  of  the  company. 

(5)  In  loans  upon  the  pledged  or  collateral  security  of  the  certifi- 
cates or  contracts  of  the  company  not  to  exceed  ninety  per  cent  of  the 
withdrawal  value  of  such  contracts. 

(6)  In  loans  to  persons  not  certificate  holders  without  pledge  or 
their  contracts  as  collateral  security,  on  bonds  secured  by  mortgage  which 
shall  be  a  first  lien  on  improved  real  estate  in  this  'State  not  to  exceed 
two-thirds   of  the   cash  value  thereof;  provided,  however,   a  purchase 
money  mortgage  or  vendor's  lien  given  to  any  company  upon  real  estate 
sold  by  it  shall  not  be  considered  a  loan  within  the  meaning  of  this 
subdivision. 

(7)  In  the  purchase,  so  long  as  the  present  war  between  the  United 


INSURANCE  LAWS  OF  TEXAS.  223 

States  of  America  and  the  Imperial  Government  of  Germany  shall  con- 
tinue, of  liberty  bonds  issued  by  the  United  States  Congress  and  in  such 
short  time  certificates  of  indebtedness  as  may  have  been  heretofore  or 
as  may  hereafter  be  authorized  by  the  United  States  Congress.  (Sec. 
15,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.,  as  amended  by  Chap. 
45,  Acts  4th  Called  Session,  35th  Leg.) 

May  Invest   in   Such   Securities   as   Life   Insurance   Companies   May   In- 
vest in. 

608.  Corporations  chartered  hereunder  may  invest  in  or  loan  upon 
any  of  the  securities  in  which  life  insurance  companies  are  permitted  to 
invest  in  or  loan  upon  in  accordance  with  the  terms  and  provisions  of 
Article  4734,  Revised  Civil  Statutes,  1911.     (Sec.  16,  Chap.  5,  Acts  1st 
Called  Session,  34th  Leg.) 

Note. — Where  a  savings  and  contract  loan  company  invests  its  funds  in  notes 
or  bonds  secured  by  a  first  lien  on  real  estate  and  where  such  security  consists 
in  part  of  improvements  insured  against  fire,  such  fire  insurance  in  amount  need 
not  be  in  excess  of  an  amount  sufficient  to  cover  the  loan  and  all  incidental  lia- 
bility. (Opinion  of  Attorney  General,  July  19,  1921.) 

Purchases  and  Loans  Shall   Be  Made   Only  Upon   Report   of   Loan   Com- 
mittee. 

609.  No  real  estate  shall  be  purchased  by  any  such  company  or  any 
loan  made  upon  bond  and  mortgage  except  upon  a  report  in  writing  of 
the  loan  committee  of  such  corporation  signed  by  them,  certifying  to 
the  kind  and  quality,  and  value  of  the  real  estate  in  question  to  the  best 
of  their  judgment;  such  report  shall  be  filed  and  preserved  among  the 
records  of  the  company  and  any  stockholder  shall  have  access  to  such 
reports.     (Sec.  17,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

How  Property  of  Company  Shall  Be  Rendered  for  Taxation. 

610.  Corporations  chartered  hereunder  shall  be  required  to  render 
for  State,  county  and  municipal  taxation  all  of  their  real  estate  as  other 
real  estate  is  rendered,  and  all  of  the  personal  property  of  such  company 
shall  be  valued  as  other  property  is  valued  for  assessment  in  this  State 
in  the  following  manner:     From  the  total  valuation  of  its  assets  shall 
be  deducted  the  reserve,  being  the  amount  of  the  debts  of  such  com- 
pany by  reason  of  its  outstanding  certificates  or  contracts,  and  from  the 
remainder  shall  be  deducted  the  assessed  valuation  of  all  the  real  estate 
owned  by  the  company  and  the  then  remainder  shall  be  the  assessed 
taxable  valuation  of  its  personal  property.     For  the  purpose  of  State, 
county  and  municipal  taxation,  the  sites  of  all  personal  property  be- 
longing to  such  companies  shall  be  at  the  home  office  of.  such  company. 
(Sec.  18,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Annual  Report  Required  of  Foreign  Company. 

611.  Any  corporation  having  authority  to  transact  the  business  per- 
mitted by  this  act  incorporated  under  the  laws  of  any  other  State,  ter- 
ritory or  country  desiring  to  transact  such  business  in  this  State,  shall 
furnish  the  Commissioner  of  Insurance  and  Banking  with  a  written  or 
printed  statement  under  oath  of  the  president  or  vice-president  or  treas- 
urer and  secretary  of  such  company,  which  shall  show: 


224  INSURANCE  LAWS  OF  TEXAS. 

(a)  The  name  and  locality  of  the  company. 

(b)  The  amount  of  its  capital  stock. 

(c)  The  amount  of  its  capital  stock  paid  up. 

(d)  The  assets  of  the  company.,  including: 

(1)  The  amount. of  cash  on  hand  and  in  the  hands  of  other  persons, 
naming  such  persons  and  their  residences. 

(2)  Real  estate  income,  where  situated  and  its  value. 

(3)  The  bonds  owned  by  the  company  and  how  they  are  secured 
and  the  rate  of  interest  thereon. 

(4)  Debts  due  the  company  secured  by  mortgage,   describing  the 
property  mortgaged  and  the  market  value. 

(5)  Debts  otherwise  secured  stating  how  secured. 

(6)  Debts  due  or  to  become  due  on  certificates  oT  contracts. 

(7)  All  other  moneys  and  securities. 

(e)  Amount  of  liabilities  of  the  company,  stating  the  name  of  the 
person  or  corporation  to  whom  liable. 

(f)  Contracts   surrendered   or   cancelled  and   unliquidated   and   all 
other  matters  of  liability  in  suspense. 

(g)  Provided,  however,  that  the   Commissioner  of   Insurance   and 
Banking  may  require  other  additional  facts  to  be  shown  by  such  state- 
ment.    The  same  character  of  statement  shall  be  made  annually  and 
each  company  shall  be  required  to  file  a  similar  statement  not  later  than 
March  1st  of  each  year.     (Sec.  19,  Chap.  5,  Acts  1st  Called  Session,  34th 
Leg.) 

Other  Papers  Required  to  Be  Filed  by  Foreign  Companies. 

612.  Such  foreign  company  shall  accompany  such  statement  with  a 
certified  copy  of  its  articles  of  incorporation,  of  all  amendments  thereto, 
and  a  copy  of  its  by-laws,  together  with  the  name  and  residence  of  each 
of  its  officers  and  directors,  all  of  which  must  be  certified  to  under  the 
hand  of  the  president  or  secretary  of  such  corporation;  he  shall  also 
furnish  copies  of  its  contracts  and  a  detailed  statement  of  its  plans  for 
doing  business  in  the  same  manner  that  these  are  required  to  be  fur- 
nished by  domestic  companies.     (Sec.  20,  Chap.  5,  Acts  1st  Called  Ses- 
sion, 34th  Leg.) 

Capital  Stock  and  Deposits  of  Foreign  Companies. 

613.  Such  foreign  company  must  as  to  its  capital  stock  be  in  con- 
formity with  the  provisions  of  this  act  relative  to  domestic  companies. 
Whenever  the  existing  or  future  laws  of  any  other  State,  or  territory  of 
the  United  States,  or  of  any  other  country,  shall  require  of  companies 
chartered  under  this  act  any  deposit  of  securities  from  such  other  State, 
territory  or  country  before  transacting  business  therein,  then  in  all  such 
cases  such  company  shall  before  doing  any  business  in  this  State  be 
required  to  make  the  same  deposit  of  securities  with  the  Treasurer  of 
this  State.     (Sec.  21,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Note. — Such  corporations,  if  foreign,  in  order  to  obtain  a  permit  to  operate 
in  Texas,  must  show  compliance  with  the  requirements  of  this  Act  as  to  the 
subscription  of  the  entire  capital  stock  the  payment  of  one-half  thereof  in  money 
at  the  time  of  organization  and  the  payment  in  money  of  the  remainder  within 
two  years  from  the  date  of  its  organization.  (Opinion  of  Attorney  General, 
June  21,  1921.) 


INSURANCE  LAWS  OF  TKX  \-.  225 

Deposits  of  Securities  Covering  Part  of  Capital  and  Also   Covering  Re- 
serves of  Foreign  Companies  Are  Required. 

614.  No  company,  incorporated  or  organized  under  the  laws  of  any 
other  State,  territory  or  country,  shall  transact  business  in  this  State, 
unless  it  shall  first  deposit  and  keep  deposited  with  the  Commissioner  of 
Insurance  and  Banking  of  this  State  for  the  benefit  of  all  the  contract 
holders  of  such  company,  an  amount  of  securities,  such  as  domestic  com- 
panies may  invest  in,  equal  to  not  less  than  thirty-three  and  one-third 
per  cent  of  its  capital  stock;  provided,  however,  that  if  a  deposit  of 
approved  securities  has  been  made  under  the  laws  of  the  State,  territory 
or  country  chartering  such  corporation  in  such  manner  as  to  secure 
equally  all  the  contract  holders  of  such  company,  then  no  deposit  shall 
be  required  in  this  State  as  to  said  thirty- three  and  one-third  per  cent 
of  the  capital  stock,  but  a  certificate  of  such  deposit  under  the  hand  and 
seal  of  the  officer  of  such  other  State  with  whom  the  same  has  been 
made  shall  be  filed  with  the  Commissioner  of  Insurance  and  Banking. 
The  reserves  of  such  company,  however,  not  organized  under  the  laws 
of  this  State  shall  be  invested  in  securities  or  property  of  the  same 
classes  as  that  in  which  home  companies  are  required  to  invest  their 
reserves  and  such  reserves  shall  be  deposited  with  the  Commissioner  of 
Insurance  and  Banking  in  the  same  manner  as  that  of  domestic  com- 
panies.    (Sec.  22,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Foreign   Companies  Shall   File  Power  of  Attorney  Designating   Commis- 
sioner of  Insurance  and  Banking  as  Attorney  for  Service. 

615.  Each  such  foreign  company  shall  file  with  the  Commissioner  of 
Insurance  and  Banking  of  this  State  an  irrevocable  power  of  attorney, 
duly  executed,  constituting  and  appointing  the  Commissioner  of  Insur- 
ance and  Banking  of  this  State  and  his  successors  in  office,  or  any  officer 
or  board  which  may  hereafter  be  clothed  with  the  powers  and  duties 
now  devolved  upon  said  Commissioner,  its  duly  authorized  agent  and 
attorney  in  fact  for  the  purpose  of  accepting  service  for  it,  or  being 
served  with  citation  in  any  suit  brought  against  it  in  any  court  of  this 
State,  by  any  person,  or  by  or  to  or  for  the  use  of  the  State  of  Texas, 
and  consenting  that  the  service  of  any  civil  service  upon  him  as  its 
attorney  for  such  purpose  in  any  suit  or  proceeding  shall  be  taken  and 
held  to  be  valid,  waiving  all  claim  and  right  to  object  to  such  service 
or  to  any  error  by  reason  of  such  service ;  and  said  appointment,  agency 
and  power  of  attorney  shall  by  its  terms  and  recitals  provide  that  it  shall 
continue  and  remain  in  force  and  effect  so  long  as  such  company  con- 
tinues to  do  business  in  this  State  or  to  collect  amounts  due  on  its  con- 
tracts from  citizens  of  this  State,  and  so  long  as  it  shall  have  outstand- 
ing contracts  in  this  State  and  until  all  claims  of  every  character  held 
by  citizens  of  this  State  or  by  the  State  of  Texas  against  such  company 
shall  have  been  settled.     Said  power  of  attorney  shall  be  signed  by  the 
president  or  vice-president  and  the  secretary  of  such  company,  wlv>se 
signature  shall  be  attested  by  the  seal  of  the  company,  and  the  officers 
signing  the  same  shall  acknowledge  the  same  before  some  officer  author- 
ized to  take  acknowledgments ;  said  power  of  attorney  shall  be  embodied 
in  and  be  approved  and  its  execution  authorized  by  resolution  of  the 
board  of  directors  of  such  company,  and  a  copy  of  such  resolution  duly 
certified  by  the  proper  officers  of  such  company,  shall  be  filed  with  the 


226  INSURANCE  LAWS  or  TEXAS. 

said  power  of  attorney  in  the  office  of  the  Commissioner  of  Insurance 
and  Banking  in  this  State  and  shall  be  recorded  by  him  in  a  book  kept 
for  that  purpose,  there  to  remain  a  permanent  record  of  said  depart- 
ment. The  provisions  of  Revised  Civil  Statutes,  Article  4773  and 
Article  4774  shall  apply  to  powers  of  attorney  provided  for  herein,  and 
the  duties  of  the  Commissioner  shall  be  the  same  as  they  are  provided  for 
in  said  article  of  the  statute  with  reference  to  foreign  life  insurance  com- 
panies. (Sec.  23,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Venue  of  Suits  Against  Company. 

616.  Suit  on  contracts  may  be  instituted  and  prosecuted  against  any 
company  issuing  the  same  in  the  county  where  the  home  office  of  such 
company  is  located  or  where  it  may  have  an  agent.     (Sec.  24,  Chap.  5, 
Acts  1st  Called  Session,  34th  Leg.) 

Agents  of  Company  Must  Be  Licensed  and  Must  Give  Bond. 

617.  All  agents  of  any  company  transacting  business  hereunder  must 
be  licensed  by  the  Commissioner  of  Insurance  and  Banking,  and  in  order 
to  obtain  such  license,  it  must  be  made  to  appear  that  such  agent  or 
agents  are  of  good  moral  character  and  of  good  repute  in  their  com- 
munities for  honesty  and  fair  dealing;  and  they  must  tender  to  the 
Commissioner  of  Insurance  and  Banking  a  bond  in  form  to  be  furnished 
by  him  in  any  sum  not  less  than  one  thousand  nor  more  than  five 
thousand  dollars,  payable  to  the  State  of  Texas  for  the  use  and  benefit 
of  any  person  who  may  be  aggrieved  by  the  action  and  conduct  of  such 
agent  in  the  sale  of  any  contract  for  the  company  of  which  he  is  licensed 
as  an  agent.     Such  agents  must  be  licensed  annually  in  the  same  man- 
ner that  life  insurance  agents  are  licensed  and  such  bond  must  be  given 
by  them.     Such  bond  may  be  sued  upon  by  any  person  having  cause  of 
action  against  such  agent  in  any  court  of  competent  jurisdiction  with- 
out the  necessity  of  making  the  State  of  Texas  or  the  Commissioner  of 
Insurance  and  Banking  a  party  to  the  suit;  and  repeated  suits  may  be 
brought  thereon  until  the  entire  amount  thereof  has  been  exhausted. 
(Sec.  24,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Officers  and  Directors  Prohibited  Under  Penalty  From  Having  Any  In- 
terest in  Purchases  or  Loans  of  the  Company. 

618.  No  director  or  officer  of  any  company  transacting  business  in 
this  State  or  organized  under  the  laws  of  this  State  shall  receive  any 
money  or  valuable  thing  for  negotiating,  procuring,  recommending  or 
aiding    in    any    purchase    or    sale    by    any    such    company    of    any 
property    or  any    loan   from    such    company,    nor    be    pecuniarily    in- 
terested, directly  or  indirectly,  either  as  principal,  co-principal,  agent 
or   beneficiary    in    any    such    purchase,    sale    or   loan;    provided    that 
nothing  contained  in  this  article  shall  prevent  the  company  from  making 
a  lo&n  upon  a  contract  by  the  borrower  not  in  excess  of  the  reserve  value 
thereof.     Any  person  violating  any  provision  of  this  section  shall  be 
guilty  of  a  misdemeanor  and  upon  conviction  thereof  shall  be  punished 
by  fine  of  not  less  than  one  hundred  nor  more  than  five  hundred  dollars. 
(Sec.  25,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 


INSURANCE  LAWS  OF  TEXAS. 

Officer  and  Agents  Prohibited  Under  Penalty  From  Misrepresenting  Con- 
tracts. 

619.  Any  officer  or  agent  of  any  company  acting  under  the  provi- 
sions of  this  act  who  shall  knowingly  misrepresent  any  material  fact 
relative  to  the  contract  or  certificate  issued  or  to  be  issued  and  sold  by 
any  such  company  to  any  purchaser  thereof,  shall  be  guilty  of  a  felony 
and  upon  conviction  shall  be  punished  by  fine  of  not  less  than  five  hun- 
dred dollars  or  by  imprisonment  in  the  penitentiary  for  a  period  of 
time  not  more  than  three  years  or  by  both  such  imprisonment  and  fine. 
(Sec.  26,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Penalties  for  Doing-  Business  Without  First  Complying  With  the  Law. 

620.  No  person,  firm,  corporation,  or  association  of  persons  or  joint 
stock  company  shall  hereafter  engage  in  this  State  in  the  business  pro- 
vided for  in  this  act,  except  in  compliance  with  this  act,  and  any  cor- 
poration which  does  so  engage  shall  have  its  charter  forfeited  by  suit  of 
the  Attorney  General  and  shall  be  liable  to  a  penalty  of  not  less  than 
one  hundred  dollars  a  day  nor  greater  than  five  hundred  dollars  a  day 
for  each  day  that  it  does  so  engage ;  all  such  suits  to  be  brought  as  other 
penalty  suits  which  the  Attorney  General  is  authorized  to  bring;  any 
person  who  does  so  engage  in  violation  of  the  provisions  hereof  shall  be 
guilty  of  a  misdemeanor  for  each  and  every  day  such  person  is  so  en- 
gaged and  shall  be  punished  by  fine  not  less  than  one  hundred  nor  more 
than  five  hundred  dollars  for  each  offense;  provided  each  day  shall  be 
a  separate  offense;  provided,  however,  that  existing  corporations,  in- 
dividuals, associations  and  joint  stock  companies  engaged  in  the  busi- 
ness defined  in  this  act  at  the  time  this  measure  goes  into  effect  shall 
have  twelve  months  thereafter  to  adjust  their  business  affairs  and  bring 
their  business  under  the  terms  of  this  act;  provided,  however,  that  they 
must  within  sixty  days  after  this  act  goes  into  effect  submit  a  statement 
of  their  business  to  the  Commissioner  of  Insurance  and  Banking,  to- 
gether with  the  certificate  of  their  intention  to  accept  the  provisions  of 
this  act,  and  comply  therewith.     (Sec.  27,  Chap.  5,  Acts  1st  Called 
Session,  34th  Leg.) 

Note. — Co-operative  savings  and  contract  companies  or  associations  are  sub- 
ject to  the  supervision  of  the  Commissioner  of  Insurance  and  Banking  whether 
such  concerns  are  incorporated  or  unincorporated  and  are  required  to  comply 
with  all  the  provisions  of  the  law,  Chapter  5,  Acts  of  the  First  Called  Session 
of  the  Thirty -fourth  Legislature  and  all  amendments  thereto.  (Opinion  of  At- 
torney General,  April  10,  1919.) 

Certain  Companies,  Associations  and  Persons  Are  Governed  by  This  Act. 

621.  All  bond  investment  companies  operating  in  this  State  under 
the.  terms  and  provisions  of  Chapter  25  of  Title  25,  Revised  Civil  Stat- 
utes of  this  State,  1911,  and  all  corporations  engaging  in  the  business 
in  this  State  defined  in  this  act,  and  all  individuals,  associations  and 
joint  stock  companies  unincorporated,  shall  be  governed  by  this  act  in 
the  manner  herein  set  forth.     Individuals,  joint  stock  associations  and 
associations  unincorporated  shall  instead  of  a  charter  file  a  certificate 
with  the  Commissioner  of  Insurance  and  Banking  acknowledged  by  them 
by  their  officers  accepting  the  provisions  of  this  act  and  specifying  and 
setting  apart  the  amount  of  capital  stock  to  be  used  in  their  business. 


228  INSURANCE  LAWS  OF  TEXAS. 

In  all  other  respects  they  shall  be  governed  by  the  terms  and  provisions 
thereof.     (Sec.  28,  Chap.  5,  Acts  1st  Called  Session,  34th  Leg.) 

Any  Section  of  This  Act  Held  Unconstitutional  Shall  Not  Apply  to  Be- 
mainder—  General  Corporation  Laws  and  General  Laws  as  to  Charges 
Shall  Apply  to  Corporations  Operating  Under  This  Act. 

622.  Should  any  section  of  this  act  be  held  unconstitutional  or  void 
for  any  reason  or  as  to  any  particular  company,  corporation,  individual 
or  association,  such  holding  shall  not  affect  the  remainder  of  the"  act. 
The  general  corporation  laws  of  this  State  where  not  in  conflict  here- 
with shall  govern  corporations  chartered  or  operating  under  this  act; 
and  the  general  laws  specifying  charges  which  may  be  made  by  the 
Commissioner  of  Insurance  and  Banking  shall  apply  to  corporations 
chartered  or  operating  hereunder.  (Sec.  29,  Chap.  5,  Acts  1st  Called 
Session,  34th  Leg.) 


INDEX. 


(Figures  Refer  to  Sections.) 
Access  to  Books — 

Commissioner  shall  have,  36,  37,  517. 
Commissioner  and  treasurer  are  entitled  to,  40. 

Accident  Insurance — 
Affidavits,  393. 
Agents,  462  to  484. 
Amendments  to  charter,  71,  122. 
Annual  meeting,  396. 
Annual  statement,  75,  121,  129,  400. 
Assessment,  395,  401,  402,  403. 
Beneficiary,  402,  404. 
Business,  what  constitutes,  395. 
By-laws,  122,  394,  397,  401,  404,  405. 
Capital  stock,  69,  71,  72,  114,  118,  123. 
Certificate  of  authority,  74,  76,  77. 
Certificate  of  membership,  401. 

Charter,  49,  50,  51,  69,  70,  71,  118,  122,  271,  392,  393,  394. 
Consolidation  of  companies,  267  to  273. 
Deposits,  98,  124  to  127. 
Defined,  68. 

Directors,  70,  82,  122,  392,  394,  397. 
Dissolution  when  companies  consolidate,  272. 
Dividends,  119,  396. 
Examination,,  74,  398,  399. 
Fees,  70,  394,  400. 

Fire,  Marine  or  Inland  Insurance,  96. 
Foreign,  121  to  131. 
Fraternal  Benefit  Societies,  489,  522. 
Incorporation,  69,  70,  122,  228,  391. 
Industrial  Accident  Board,  335  to  349. 
Industrial  Insurance,  118. 
Inquiries  must  answer,  42. 
Investments  and  loans,  55,  56,  57,  128,  240. 
Liabilities  on  policies,  94,  95,  401,  402. 

Life,  Health  and  Accident  Insurance  Co.   (Home),  68  to  120. 
Life,  Health  and  Accident  Insurance  Co.    (Foreign),  121  to  131. 
Mutual  Assessment  Accident  Insurance  Co.    (Home),  391  to  407. 
Losses,  when  payable,  94,  95. 
Non-competing  companies  may  consolidate,  267. 
Officers,  122. 
Policy  forms,  116. 
Real  estate  holdings,  81. 
Reinsurance,  83. 
Reserve,  16. 
Reserve  fund,  401. 
Service  of  process,  93. 
Stock  certificates,  396. 

Stockholders,  59,  60,  61,  62,  65,  70,  71,  72,  73,  78,  84,  267,  268. 
Suits  on  policies,  92. 
Taxation,  91,  97,  275  to  279. 
Terms  defined,  68. 
Workmen's  Compensation,  380. 


23'0  INDEX. 

Action — 

Anti-trust  law,  556,  558,  561,  564,  565,  566,  572. 

Attorney  General,  37,  138,  144,  168,  233,  238,  420,  517,  558,  561,  565,  566,  572. 

Citizens,  city,  town  or  village,  211. 

Civic  organization,  211. 

Cause  of,  shall  survive,  331. 

Commissioner,  78. 

Company,  143,  211. 

County  or  district  attorney,  565,  566. 

Fraternal  Benefit  Societies,  517. 

Policyholders,  78,  211. 

State  Fire  Insurance  Commission,  211. 

Stockholders,  78. 

Surety  company  bonds,  256. 

Workmen's  Compensation  Law,  299  to  303,  331,  342,  343,  375,  382. 

Administrator — 

Fidelity,,  Guaranty  and  Surety  Companies  may  act  as,  250. 

Admission  Fees — 

Mutual  Accident  Companies,  394,  395. 

Advertising — 

Mutual  Aid  Association,  524. 
State  Treasurer's  receipt,  97,  145. 
Sales  of  stock,  532. 

Affidavit- 
Agents  for  excessive  insurance,  182   (4). 
Corporators,  70,  225,  393. 
False,  129. 

Fraternal  Benefit  Societies,  503. 
Mutual  Accident  Company's  Corporators,  393. 
Reinsurance,  182   (2). 
Resident  agents,  as  to,  471. 

Agents— r- 

Affidavit  as  to  resident  agents,  471. 

Anti-trust  law,  564,  568,  570. 

Application  for  license,  165,  440,  477,  525. 

Attorneys  exempt  from  agency  laws,  465. 

Blue  Sky  Law,  under,  527,  535,  .536,  538,  545. 

'Cause  to  revoke  license,  how  ascertained,  217,  478. 

Certificate  of  authority,  77,  165,  446,  462,  466,  476,  477,  524,  525. 

Commissioner  or  clerk  cannot  be,  8. 

Commissions  paid  to  licensed  agents  only,  472. 

Common  carriers,  property  exempt  from  Resident  Agent  Law,  470. 

Company  only,  shall  be  agent  of,  475. 

Contract  with  company,  165. 

Co-Operative  Savings  -and  Contract  Loan  Companies,  617-619. 

Corporation  cannot  be  agent,  476. 

Defined,  258,  465. 

Designation  of  officer  to  employ,  477. 

Dividing  commissions  with  unlicensed  persons,  472. 

Embezzlement,  481. 

Examination  of,  36. 

Excess  insurance  in  unauthorized  companies,  182    (457). 

Fidelity,  Guaranty  and  Surety  Companies,  228,  470. 


INDEX.  231 

Agents — Continued. 

Fire,  Marine,  Fidelity  and  Casualty  Companies,  201,  213,  217,  463,  470  to 

474. 

Fraudulent  insurance,  469,  480,  481,  482. 
Fraternal  Benefit  Societies,  525. 
General  agents'  occupation  tax,  483,  484. 
Liable  to  policyholder,  468. 

License,  77,  165,  456,  462,  463,  467,  468,  477,  478,  479. 
Life  Companies,  77,  111,  142,  463,  464,  465,  466,  467,  468,  475,  476,  477,  478, 

479,  480,  481,  482. 
List  of,  539. 

Misdemeanor,  289,  466,  479,  480,  482,  525,  545. 
Misrepresentation  of  policy,  293,  469. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  456. 
Mutual  Life  Insurance  Co.,  165. 
Non-resident,  470  to  474. 
Officer  designated  to  employ,  474. 

Penalties,  463,  464,  466  to  470,  472,  473,  479,  480,  481,  482. 
Policyholder,  when  personally  liable  to,  468. 
Rebates  and  discriminations,  213,  214,  289. 
Reciprocal  indemnity  contracts,  446,  439  to  442,  444,  447,  448. 
Requisition  for  license,  477,  525. 

Resident  agents,  all  policies  must  be  issued  through,  470  to  474. 
Revocation  of  license,  473,  477,  478. 
Stock  company  cannot  be  agent,  476. 
Taxes,  subject  to  payment  of,  467,  483,  484. 
Unlicensed,  462,  463,  466,  472. 
Withdrawn  companies,  142. 

Annual  Report — 

To  Governor  by  Commissioner,  25. 

To  Insurance  Commissioners,  copy  of,  26. 

To  Legislature,  43. 

Annual  Statement — 

Arranged  in  tabular  form  for  report,  43. 

Assessment  Companies,  149. 

Casualty  Companies,  229,  230,  231. 

County  Mutual,  453. 

Commissioner's  report,  43. 

Co-Opera tive  Savings  and  Contract  Loan  Companies,  611. 

Fee  for  filing,  47,  75,  150,  245,  400,  425,  437. 

Filed  when,  180. 

Fire  and  Marine  Companies,  180,  181. 

Fidelity,  Guaranty  and  Surety  Companies,  252. 

Foreign  Companies,  121,  507,  611. 

Form,  Commissioner  may  change,  30,  75,  230,  514. 

Fraternal  Benefit  Societies,  496,  507,  514. 

Gross  premiums  collected,  229,  275. 

Investments  in  Texas  Securities,  136,  137. 

Life,  Health  and  Accident  Companies,  75,  121,  136,  137. 

Local  Mutual  Aid  Societies,  524. 

Mutual  Accident  Companies,  400. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  456,  460. 

Mutual  Fire,  Storm,  Lightning  and  Hail  Companies,  412. 

Mutual  Hail  Companies,  436. 

Mutual  Life  Companies,  164. 

Premium  receipts,  137. 

Printers'  Mutual  Companies,  ,453. 

Reciprocal  Indemnity,  attorney  of,  444. 

Taxes,  137,  138,  140,  141,  275,  276,  277. 


232  INDEX. 

Anti-Rebate  Laws — 

Fire  companies,,  213,  214. 

Life,  Health  and  Accident  Companies,  289. 

Anti-Trust  Law,  551  to  573— 

Actions,  have  precedence,  566. 

Agents'  actions,  564,  568,  570. 

Attorney  General,  556,  558,  561,  565,  566,  572. 

Boycott,  553. 

Business,  to  abstain  from  engaging  or  continuing  in,  551. 

Combinations  of  persons,  firms  or  corporations,  551,  552,  553. 

Competition,  to  prevent  or  lessen,  551,  552,  568. 

Consolidation  of  Insurance  Companies,  267. 

Consolidation  of  stock,  bonds,  franchise  or  properties,  552. 

Conspiracy  in  restraint  of  trade,  553,  554,  567,  569. 

Contract  or  agreement  void,  562. 

County  or  District  Attorney,  561,  572. 

Defaulting  corporations,  successor  to,  557,  560. 

Definitions,  551,  552,  553. 

Fees  of  County  and  District  Attorney,  561,  573. 

Felony,  568  to  571. 

Foreign  Corporations,  558. 

Forfeiture  of  charter  and  franchise,  555,  556,  557,  559,  560. 

Injunction,  558. 

Investigation  of  violation  of  law,  565. 

Justice  of  the  Peace,  565. 

Management  or  control,  two  or  more  corporations  under  same,  552. 

Monopoly,  552,  554,  567,  569. 

Outside  this  State,  trusts  formed,  569. 
.  •      Penalties,  555,  557,  561,  562,  563,  564,  567  to  570. 

Prices,  to  fix,  maintain  or  control,  551. 

Prohibited  trusts,  monopolies  and  conspiracies,   554. 

Quo  warranto  proceedings,  556,  559. 

Rebates,  567,  568. 

Restrictions  of  trade,  551,  553. 

Trusts,  551,  552,  554,  567,  569. 

Venue,  556,  558,  561,  571. 

Witnesses,  sworn  and  subject  to  contempt,  565. 

Appeal — 

Industrial  Accident  Board,  340,  341. 

Texas  Employers'  Insurance  Association,  340,  341. 

Fraternal  Benefit  Societies,  521. 

Application  for  Policy — 

Agent  cannot  change,  475. 

Defense,  account  of  misrepresentation,  280,  281,  282,  286,  294. 

Fraternal  Benefit  Societies,  499,  503. 

Fraudulent  misrepresentation,  282. 

May  be  made  part  of  policy,  286,  288. 

Misrepresentation,  280,  281,  286,  288. 

Mutual  Accident  Companies,  393. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  410,  415. 

Notice  of  misrepresentation,  280,  286. 

Photographic  or  printed  copy,  286. 

Part  of  contract,  283,  288. 

Reciprocal  contracts;  440. 


INDI:\.  233 

Application — 

Charter,  Mutual  Hail  Company,  431. 

For  receiver,  domestic  fraternal  societies,   518. 

Insurance  on  mutual  plan,  393,  409,  429. 

Reciprocal  indemnity  contracts,  447. 

Shall  contain,  409,  429. 

Apportionment  of  Surplus  to  Policyholders — 
Mutual  Life  Insurance  Companies,  159. 

Appointment — 
Clerks,  5. 
Commissioner,  1. 
Commissioner  as  Attorney  for   Service,    130,    149,   252,   256,   459,    507,   508, 

582,  615. 

Directors  Texas  Employers'  Insurance  Association,  351. 
Industrial  Accident  Board,  members  of,  335,  336. 
State  Fire  Insurance  Commission,  members  of,  192. 

Assessment  Life  or  Natural  Premium  Company,   149  to  151. 

Assessment  Life  or  Casualty  Companies — 
Annual  statement,  149. 
Assets  necessary,  149. 
Certificate  of  compliance,  149. 
Certificate  of  payment  in  full,  149. 
Charter,  must  file  certified  copy,  149. 
Commissioner  appointed  Attorney  for  Service,  149. 
Constitution  and  by-laws,  certified  copy,  149. 
Exempt  from  certain  laws,  292. 
Fees,  150. 

Fraternal  Benefit  Societies  exempt,  151. 
Licensed,   149. 
Prerequisites  to  being  licensed,  149. 

Assessments — 

Fraternal  Benefit  Societies,  494,  500,  503,  514>  516. 

Mutual  Accident  Companies,  395,  401,  402,  403,  405. 

Mutual  Burglary,  Robbery  or  Transportation  Loss  Companies,  458. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  410,  414,  415,  417. 

Mutual  Hail  Companies,  429,  430,  433. 

Natural  Premium  Companies,  149. 

Texas  Employers'  Insurance  Association,  363  to  370. 

Assets  and  Liabilities — 

Assessment  Companies,  149. 

Casualty  Companies,  229. 

Consolidation  of  companies,  269,  270. 

Fidelity,  Guaranty  and  Surety  Companies,  252. 

Fire  and  Marine  Insurance  Companies,  181. 

Life,  Health  and  Accident  Insurance  Companies,  75,  121. 

Mutual  Fire,  Lightning, 'Hail  and  Storm  Insurance  Companies,  419,  420. 

Mutual  Life  Insurance  Companies.  164. 

Assignee — 

Fidelity,  Guaranty  and  Surety  Companies,  may  act  as,  250. 

Association — 

Definition  of  "Association,"  378. 
Corporate  powers  of,  shall  not  expire,  376. 


23'4  INDEX. 

Assumed  Bisk — 

Workmen's  Compensation  Law,  no  defense,  297,  302. 

Attachment — 

Compensation  exempt  from,  299. 

Deposits,  exempt  from,  252. 

Fraternal  Benefit  Society  benefit,  exempt,  512. 

Attorney  for  Service — 

Assessment  Companies,  149. 

Blue  Sky  Law,  544. 

Co-Operative  Savings  and  Contract  Loan  Companies,  615. 

Fidelity,  Guaranty  and  Surety  Companies,  251,  252,  256. 

Fraternal  Benefit  Societies,  507,  508. 

Life  Companies,  130. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  459. 

Reciprocal  Exchange,  441. 

Attorney  General — 

Anti -trust  laws,  556,  558,  561,  565,  566,  572. 

Approving  charter,  49,  70,  152,  225,  393,  394. 

Approve  reinsurance  contract  under  fire  insurance  company's  bond,  177. 

Certificate  of  authority  revoked,  212,  216. 

Fraternal  Benefit  Societies,  517. 

Mutual  Life  Insurance  Companies,  152,  168. 

Receiver,  skall  ask  for,  233,  517. 

Reports  to,  21,  138,  411,  517. 

Suits  filed,  37,  138,  140,  144,  168,  233,  239,  382,  420,  517,  556,  .558,  561,  565, 

566,  572. 
Taxes,  138,  140. 

Mutual  Accident  Companies,  393,  394. 
Mutual  Hail  Companies,  inspection  of  records,  434,  436. 

Automobile  Insurance — 
Fire  Companies,  170. 
Casualty  Companies,  223. 

i 
Average  Weekly  Wages — 

Definition,  378. 

Paid  to  injured  employe,  310,  314,  315,  317,  326. 

Beneficiary — 

Definition,  68. 

Fraternal  Benefit  Society,  490,  491,  495,  498,  500,  511,  512. 
Life  Insurance  Company,  120. 
Mutual  Accident  Company,  402,  403. 

Workmen's  Compensation  Act,  299,  302,  309,  310,  311,  313,  332,   341,  343, 
378,  383,  384,  386. 

Benefits — 

Fraternal  Benefit  Society,  489,  493,  500,  512,  516. 

Mutual  Accident  Companies,  401. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  413. 

Blanks- 
Commissioner  shall  furnish,  22. 
Mutual  Hail  Companies,  436. 


INDEX.  235 

Blue  Sky  Law,  527  to  550— 
Advertising  literature,  532. 

Addresses  of  promoters  or  corporation  officers,  529. 
Agents  of  corporation,  527,  535,  536,  538,  545. 
Appeal  from  refusal  to  issue  permit,  537. 
Attorney  for  Service,  544. 
Banks  and  Trust  Companies  exempt,  548. 
Bonds,  536,  538. 
Books  of  corporation,  541. 
Cancellation  of  permit,  538,  542. 
Capital  stock,  amount  of,  529,  543. 
Change  of  price  of  stock,  529. 
Charter,  copy  filed,  530. 
Commissions,  527,  530,  533,  536,  540. 
Commissioner  of  Insurance  and  Banking,  529,  530,  531,  533,  536,  537,  538» 

539,  541,  542,  543,  544,  546,  549,  550. 
Corporations  subject  to  this  act,  527. 
Cumulative,  this  act  is,  547. 
Definitions  of  Commissioner  and  Secretary,  550. 
Deposit  of  collections  on  sales,  540. 
Deposit  of  fees,  549. 
Domicile  of  corporation,  529. 
Examinations,  549. 

Exemption  for  certain  corporations,  548. 
Expenses,  incident  to  sale  of  stock,  527,  530,  533,  536. 
Expert  employed,  531. 
Extension  of  time  for  sale,  546. 
Failure  to  organize,  546.  . 
Filing  of  documents,  529,  530,  532,  539. 
Filing  fee,  529. 

Form  of  contracts,  stocks  or  deeds,  529. 
Foreign  Companies,  530,  543,  544. 
Future  sale  of  stock,  534. 
Inspection  of  books,  541. 

Insurance  Companies  Act,  does  not  apply  to,  543. 
Interest  of  salesman  in  sale,  536. 
Increase  of  stock,  527  to  530. 
List  of  names  of  officers,  agents,  etc.,  539. 
Loan  Companies,  543. 
Location  of  corporation,  529. 
Mining,  Oil  or  Gas  Corporation,  528,  531. 
Misdemeanor,  545. 
Misrepresentation,  538. 

Money  for  sale  of  stock  deposited  in  bank,  540. 
Name  of  corporation,  529. 
New  bond,  538. 

Officers  of  corporation,  531,  539,  540,  545. 
Organizer,  541. 
Organization  fee,  527. 
Penalties,  545. 

Permit,  532,  533,  534,  538,  542,  543,  545. 
Power  of  attorney,  544. 
Price  of  stock,  529,  533. 
Promoter,  529,  531,  535,  539,  541,  546,  548. 
Promotion  fee,  527,  528,  530,  533,  535,  536,  540. 
Railroad  Companies  exempt,  548. 
Sale  of  stock,  527,  529,  542,  543,  544,  545. 
Secretary  of  State,  529  to  533,  538,  539,  541,  546,  549,  550. 
Service  of  legal  process,  544. 
Statements  to  be  filed,  529  to  532. 
Stock,  already  sold,  534. 


23'6  INDEX. 

Blue  Sky  Law,  527  to  550 — Continued. 
Stock  brokers  exempt,  548. 
Stock,  considered  paid  for  when;  535. 
Stock,  unsold,  534. 

Subscriber  must  be  refunded,  when,  546. 
Subscription  list  and  contracts,  537. 
Suit  to  reinstate  permit,  542. 
Suit  upon  bond,  538. 

Townsite  Corporation,  528,  529,  531,  532. 
Value  of  property  must  be  given,  531. 

Board  Contracts — 

Dividends  of  Life  Companies,  84,  119,  289. 

Bonds — 

Approval  of,  250. 
Blue  Sky  Law,  536,  537,  538. 
Cancellation  by  Surety  Companies,  260. 
Chief  clerk,  6. 
Commissioner,  4. 

Co-Opera tive  Savings  and  Contract  Loan  Company's  officers,  598,  617. 
Deposit  in  lieu  of,  178. 
Excess  insurance  broker,  182   (5). 
Farmers  Loan  Act,  issued  under,  134. 

Fidelity,  Guaranty  and  Surety  Companies  may  make,  250,  251,  253. 
Fidelity,  Guaranty  and  Surety  Companies  may  withdraw,  254,  260. 
Foreign  Fire  Company,  176,  177,  178,  179. 
.Fraternal  Beneficiary  Associations,  501,  503.  • 
Mutual  Life  Insurance  Company's  officers,  153. 
Officers  of  company.  153.  415.  432.  452. 
Printers'  Mutual  Company.  452. 
Securities  withdrawn,  in  lieu  of.  254. 
State  and  county  officials.  250,  251,  252. 
Suit  on.  256. 

Unauthorized  Surety  Company,  made  by,  259. 
Withdrawal   from,  255.   260. 

Burglary,   Robbery  and  Transportation  Loss  Mutual  Companies,   454  to 
461. 

Burglary  and  Theft  Insurance  Companies — 

Agents,  462  to  484. 

Application,  455. 

Certificate  of  authority,  Mutual  Companies,  456. 

Organization,  223,  454,  455. 

Resident  agents,  470  to  474. 

Business  of  Insurance — 

Companies  cannot  transact  both  fire  and  life,  96. 
Life  Insurance  Companies,  28. 
Mutual  Assessment  Accident  Companies,  395. 
Mutual  Burglary  and  Robbery  Companies,  456. 
Mutual  Life  Insurance  Companies,  153,  160. 
Must  be  transacted  through  agents,  470. 

By-Laws — 

Adoptions,  70,  153,  352. 
Assessment  Companies,  149,  252. 
Casualty  Companies,  225,  228. 
Co-Operative  Life  Companies,  153. 


INDEX.  237 

By-Laws — Continued. 

Foreign  Companies,  122. 

Fraternal  Benefit  Societies,  486,  487,  490,  499,  501,  503,  507,  510,  511,  513, 

514. 

Home  Companies,  64. 

Mutual  Accident  Companies,  394,  397,  401,  404,  405. 
Mutual  Fire,  Storm,  Lightning  and  Hail  Companies,  410,  414,  415. 
Mutual  Hail  Companies,  432. 
Texas  Employers'  Insurance  Association,  352,  353,  354. 

Capital  Stock- 
Annual  statement,  181,  229. 
Bona  fide  property  of  company,  52,  74. 

Blue  Sky  Law,  527,  529,  530,  533  to  536,  538,  540,  541,  543,  544,  545. 
Casualty  Companies,  50,  51,  226,  227,  235,  247. 
Change  and  reinvest,  57. 

Co-Operative  Savings  and  Contract  Loan  Companies,  587,  589,  600,  613. 
Consists  of  what,  55. 
Consolidated  Companies,  268,  269,  270. 
Deposits,  97,   108,   145. 

Fidelity  and  Surety  Companies,  72,  250,  252,  291. 
Foreign  Companies,  123. 
Fractional  snares  may  be  voted,  72. 
Home  Company,  all  kinds,  50,  54,  55,  57,  72. 
Impairment,  18,  114,  172,  173,  174. 
Increased  or  reduced,  71,  72,  114,  235,  247. 
Industrial  Companies,  72,  118. 
Investments  of,  55,  57,  80,  227. 
Liability  Companies,  227,  291. 

Life,  Health  and  Accident  Companies,  69,  72,  73,  114,  118,  123. 
Live  Stock  Companies,  222. 

Mutual  Accident  Companies  have  none,  391,  396. 
New,  174. 

Paid  up,  33,  51,  69,  74,  123. 
Shares,  54,  69,  72,  73. 

Casualty  Insurance  Companies,  223  to  248 — 
Affidavit  of  corporators,  225. 
Agents,  462  to  474,  478  to  482. 
Annual  statement,  229,  230,  231,  236. 
By-laws,  225,  228. 

Capital  stock,  50,  55,  57,  72,  224,  225,  226,  227,  229,  235,  247. 
Certificate  of  authority,  51,  227,  238,  243. 
Charter,  49,  50,  51,  224,  225,  271. 
Consolidation  of  companies,  267  to  273. 
Corporate  powers,  228. 
Corporators,  number  of,  223. 
Cumulative  statute,  248. 
Deposits,  227,  231,  234,  237. 

Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66,  225,  226,  228,  236. 
Dissolution  when  companies  consolidate,  272. 
Dividends,  236. 

Employers'  liability,  experience,  reports  and  calculation,  388  to  390. 
Examination,  51,  52,  232,  233. 
Fees,  244,  245. 

Forfeit  for  doing  business  without  license,  238. 
Fraternal- Benefit  Society,  489. 
Inquiries,  must  answer,  42. 
Investments  and  loans,  227,  240. 
Laws  applicable  to  Fire  and  Life  Companies  govern,  290,  291. 


238  INDEX. 

Casualty  Insurance  Companies,  223  to  248 — Continued. 
Name,  50,  224. 
Officers,  226,  227,  228. 
Organization,  49,  223,  291. 
Penalty  suits,  239. 

Purposes  for  which  incorporated,  223. 
Real  estate  holdings,  241,  242, 
Service  of  process,  246. 

Statute  applies  only  to  companies  under  it,  244. 
Taxation,  275  to  279. 
Stock  subscription  books,  226. 
Venue  for  penalty  suits,  239. 

Certified  Copies  of  Papers — 
Charter,  122,  409. 

Commissioner  shall  furnish,  11,  24,  45,  46,  70,  77,  152. 
Evidence,  received  as,  41. 
Fees  for,  46,  47,  70,  225,  394,  400. 

Certificate  of  Authority- 
Agents  77,  166,  447,  462,  463,  466,  476,  478,  479,  525. 
Assessment  Companies,   149. 
Blue  Sky  Law,  532,  533,  536. 

Burglary,  Robbery  and  Loss  in  Transportation  Mutual  Companies,  456. 
Casualty  Companies,  20,  33,  44,  51,  227,  233,  243. 
Certified  copy  for  agent,  77. 

Co-Operative  Savings  and  Contract  Loan  Companies,  601,  602. 
Excess  insurance  broker,  182    (4),    (5),    (6). 
Expiration,  33,  74,  76,  117,  142,  165,  166,  506. 
Fees,  46,  47,  76,  165,  245,  400,  506,  507. 

Fidelity,  Guaranty  and  Surety  Companies,  253,  254,  257,  259. 
Fire  Companies,  20,  33,  44,  51,  409,  447. 
Foreign    Companies,   conditions   precedent,    117,    507. 
Fraternal  Benefit  Societies,  503,  506,  507. 
Home  Companies,  51. 

Issued,  33,  51,  74,  76,  117,  243,  447,  452,  470,  473,  474,  506,  507,  532,  533. 
Life,  Health  and  Accident  Companies,  20,  33,  36,  44,  74,  76,  117,  132,  135, 

140,  142,  476,  477  to  482. 
Mutual  Accident  Companies,  394,  399. 
Mutual  Fire,  Storm  and  Lightning  Companies,  Printers'  Mutual  Companies, 

409,  410,  411,  420,  423,  429,  430. 
Mutual  Life  Insurance  Companies,  152,  153,  164. 
Publication  of,  263,  274. 
Reciprocal  indemnity  contracts,  447. 
Renewals,  76,  95,  117. 
Revocation,   18,  20,  33,  36,  44,   111,   119,   161,   182    (3),  212,  216,  233,  257,. 

261,  399,  411,  420,  423,  447,  477,  478,  515,  519,  521. 
Surrender  by  Fidelity,  Guaranty  and  Surety  Companies,  254. 
Suspension,  20,  36,  411,  423. 
Taxes  must  be  paid  before  issuance,  276. 
Void,  95. 

Certificate- 
Compliance,  149,  507. 

Fraternal  Benefit  Society,  of,  489,  494,  495,  497,  498,  503,  507,  514,  521. 
Preliminary,  to  solicit  members,  152,  409,  429,  503. 
Taxes,  138,  140,  276. 

Certificate  of  Deposit — 

Fidelity,  Guaranty  and  Surety  Companies,  252. 

Foreign  Companies,  127,  252. 

Life  Companies,  registration  of  policies,  99. 


INDEX.  239 

Certificate  of  Membership — 

Mutual  Assessment  Accident  Company,  401. 

Certificate  of  Payment  in  Full — 
Assessment  Companies,  149. 

Certificate  of  Re-Insurance — 
Casualty  Companies,  182. 
Fire  Companies,  182. 
Marine  Companies,  182. 

Certificate  of  Stock- 
Issue' of  new  after  impairment,  173,  174. 
Return  of,  after  impairment,  173. 
Mutual  Accident  Company  has  none,  396. 

Certificate  of  Valuation — 
Foreign  Companies,  14,  15. 

Charter — 

Amendments,  71,  122,  499,  504. 

Assessment  Companies,  149,  392,  393,  394,  406. 

Attorney  General,  submitted  to,  49,  70,  225,  393,  394. 

Casualty  Companies,  49,  50,  51,  224,  225. 

Consolidated  Companies,  271. 

Co-Operative  Savings  and  Contract  Loan  Companies,  585. 

Fee  for  filing,  47,  70,  225,  394,  425,  437. 

Fidelity,  Guaranty  and  Surety  Companies,  249,  252. 

Filing,  11,  49,  70,  225,  410,  494,  503,  504,  507. 

Foreign  Companies,  122,  506,  507. 

Forfeiture,  119,  406,  420,  555,  556,  557,  559,  560. 

Fraternal  Benefit  Societies,  499,  503,  504,  507. 

Home  Companies,  49,  50,  51. 

Investment  Companies,  531,  532. 

Life,  Health  and  Accident  Companies,  69,  70,  71,  122. 

Mutual  Accident  Companies,  392,  393,  394. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  456. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  410,  420. 

Mutual  Hail  Companies,  430,  431. 

Mutual  Life  Insurance  Companies,  152. 

Chief  Clerk — 

Appointment,  5. 
Bond,  6. 
Duties,  6. 

Claims — 

State  Treasurer  to  pay,  when  company  has  defaulted,  257. 
Filing  claims,  time  limited,  338. 

Clerks — 

Department,  5. 

Insurance  Commission,  198,  199. 

Industrial  Accident  Board,  337. 

Co-insurance  Clause — 

Exemption,  as  to,  187,  209. 
Forbidden  in  policies,  186,  208,  209. 


240  INDEX. 

Collection  of  Interest — 

On  securities,  may  be  permitted  by  Treasurer,  237. 

Commissioner — 
Appointment,   1. 
Bond  and  oath,  4. 
Clerks,  5,  6. 
Inability  to  act,  6. 

Insurance  Commission  Chairman,  192,  193. 
Of  other  States,  26,  27. 
Records  of  State  Treasurer,  access  to,  40. 
Seal,  7. 

Term  of  office,  2. 
Title,  7. 
Vacancies,  3. 

Commissioner's  Duties,  9  to  48 — 
Action,  may  maintain,  78. 

Annual  statement,  for,  30,  75,  121,  165,  230,  231,  400,  611. 
Approval,  370,  505,  591. 
Apportionment  of  surplus,  160. 
Blanks,  shall  furnish,  22. 

Blue  Sky  Law,  529,  530,  533,  536  to  539,  541,  542,  549,  550. 
Bonds,  shall  approve,  176,  182   (5),  501,  503,  598,  617. 
Books,  access  to  companies,  37. 
Business,  shall  suspend,  20,  28,  600,  606. 
Casualty  Companies'  policies,  231. 

Capital,  impairment,  18,  114,  123,  172,   173,  174,  600. 
Certified  copies  of  records  given,  11,  24,  45,  77,  225,  394. 
Certificate  of  authority,  shall  issue,  33,  51,  74,  76,   117,  149,   152,  227,  243, 

253.  409,  410,  424,  429,  430,  447,  452,  477,  503,  533,  601,  602. 
Certificate  of  registration  of  policies,  99,   103,  104. 
Certificate  of  reinsurance,  182. 
Certificate  of  valuation,   14,  15. 
Certificate  revoked,  18,  20,  33,  36,  37,  44,  111,   119,  143,  152,  168,   182,  212, 

216,  233,  257,  261,  289,  399,  411,  420,  447,  477,  478,  515,   519,  521,  538, 

542,  600,  606. 

Certify  taxes  to  Treasurer,  138,  276. 

Charters,  28,  49,  51,  69,  70,  71,  152,  224,  225,  393,  394,  456,  585. 
Contracts,  shall  approve,  591,  599,  602. 
Deposits,  must  approve,  97,  98,  128,  252,  589. 
Examinations,  19,  36,  51,  52,  74,  140,  153,  167,  168,  232,  233,  399,  411,  419, 

444,  474,  517,  519,  549,  586. 
Examiners,  may  appoint,  37,  232,  517,  519,  586. 
Fees,  46,  47,  107,  165,  400,  425,  437,  503,  506. 
Fee  book,  48. 
File  papers,  11. 

Fraternal  Benefit  Societies,  503,  505,  506,  517,  519. 
Inquiry,  may  make,  42. 

Insurance  Commission,  189,  211,  212,  216,  220. 
Laws,  shall  execute,  10. 
License  granted,  362. 
License  refused,  266. 
Mutilated  policies,  shall  cancel,  102. 
Mutual  Accident  Companies,  394,  399. 
Mutual  Companies,  shall  admit,  29,  409,  410,  424,  430. 
Net  value  of  policies,  12,  13,  14,  34. 
Policies,  shall  value,  12,  13,  14,  16,  34,  35,  101,  156. 
Policy  forms,  shall  approve,  116,   160. 
Real  estate,  forced  sale,  242. 
Registration  of  policies,  99,  101,  103,  590,  592. 


INDEX.  241 

Commissioner's  Lfuties — Continued. 

Registration  fees,  how  distributed,  107,  596. 

Reports,  21,  25,  26,  27,  43,  136,  137,  138. 

Reinsurance  contracts,  83,  177. 

Reserve  calculation,  12,  16,  17,  34,  35,  264,  390,  592. 

Resident  agents'  law,  473,  474. 

Securities,  shall  keep  record,  104,  106,  109,  110,  614. 

Securities,  transfer  to  Treasurer,  38,  39,  40. 

Service  of  process,  131,  252,  256,  508,  615. 

State  Fire  Insurance  Commission,  member  of,  192. 

Suits,  shall  institute,  18,  37. 

Witness  refusing  to  testify,  31. 

Workmen's  Compensation,  333,  360,  362,  370,  380,  381. 

Complaints — 

Insurance  Commission,  210. 
Rates  of  Fire  Insurance,  210. 

Commission — 

Blue  Sky  Law,  527,  530,  533. 

Companies  shall  not  pay  to  officers,  111,  113. 

Agent  of  company  prohibited  from  paying,  472. 

Compensation — 

Actions  for,  309,  339,  340,  341,  342. 

Amount  of,  310  to  317,  330. 

Begins  on  eighth  day,  304. 

Beneficiaries,  310,  311,  313,  332. 

Death  cases,  311,  312. 

Employes  of  subcontractor,  342. 

Funeral  benefit,  313. 

Medical  aid,  medicine  and  hospital  service,  304,  305,  306,  307. 

Minors  or  mentally  incompetent  injured  workmen,  326,  327. 

Payable  when,  314,  315,  318,  319,  320,  329,  338,  343,  347,  348,  349,  386. 

Partial  incapacity,  315,  316. 

Specified  injuries,  317. 

Total  incapacity,  314,  316. 

Waiver  of  rights  to,  328. 

Consolidation  of  Companies,  267  to  273 — 
Anti-trust  laws  must  not  be  violated,  267. 
Assets,  269,  270. 
Capital  stock,  268,  269,  270. 
Charter,  271. 

Dissolution  of  absorbed  companies,  272. 
Name,  269. 

Non-Competing  Companies,  267. 
Policies  assumed  by  reorganized  companies,  273. 
Stockholders'  meeting,  268. 
Value  of  stock,  269. 

Conspiracy  in  Restraint  of  Trade — 
Defined,  553. 

Penalties,  555,  557,  561,  563,  567  to  571. 
Prohibited,  554. 

Constitution  and  By-La'ws — 

Amendments,  499,  503,  504,  513. 

Assessment  Companies,   149. 

Fraternal  Beneficiary  Association,  486,  487,  489,  493,  497,  499,  501,  503,  504, 

507,  514. 
Mutual  Accident  Companies,  396,  397,  401,  405. 


242  INDEX. 

Contributory  Negligence — 

Workmen's  Compensation  Law,  no  defense,  297,  302. 

Contracts — Co-operative  Savings  and  Contract  Loan  Compani 
Approval,  591,  599,  602. 
Cancellation,  603. 
Registration,  590,  592,  596. 
Withdrawal,  604. 
Valuation,  592. 

Co-operative  Savings  and  Contract  Loan  Companies — 
Agents,  617,  619. 
Annual  statement,  611. 
Attorney  for  Service,  615. 
Bonds,  598,  617. 

Capital  stock,  587,  589,  600,  613. 
Certificate  of  authority,  601,  602. 
Charter,  585. 

Contracts,  approval,  591,  599,  602. 
Contracts,  cancellation  and  withdrawal,  603,  604. 
Contracts,  registration  and  valuation,  590,  592,  596. 
Constitutionality,  622. 
Custodian,  596. 

Deposits,  589,  593,  594,  597,  605. 
Dividends,  606. 
Examinations,  586. 
Fees,  596. 

Foreign  companies,  611  to  615. 
Investments,  607,  608,  609. 
.  Loan  or  reserve  fund,  605. 
Officers,  597,  598,  618,  619. 
Organization,  585,  602. 
(Other  companies  included,  621.) 
Penalties,  600,  606,  618,  619,  620. 
Powers  and  authority,  588. 
Receiver,  600. 
Reserves,  592,  597,  605. 
Securities,  589,  595,  607,  614. 
Taxation,  610. 
Venue,  616. 

Corporation — 

Agent,  cannot  be,  476. 

Blue  Sky  Law,  527  to  550. 

Casualty  Companies,  228. 

Fidelity,  Guaranty  and  Surety  Companies,  250. 

May  be  organized  to  do  one  or  more  kinds  of  insurance,  291. 

Mutual  Hail  Companies,  428. 

Printers'  Mutual  Associations,  451. 

Reciprocal  indemnity  contracts,  may  exchange,  438,  445. 

Corporation  Laws — 

Co-Operative  Savings  and  Contract  Loan  Companies,  585. 
Govern  insurance  companies,  67,  79. 
Life  Companies,  148. 

Corporators — 

Casualty  Companies,  225,  226. 

Certify  to  capital  stock,  52. 

Life,  Health  and  Accident  Companies,  69,  70. 

Mutual  Fire,  Lightning  and  Hail  Companies,  408,  409. 

Mutual  Life  Insurance  Companies,  152. 

Stockholders'  meetings,  70,  225. 


INDEX.  243 

Credit  Insurance  Companies — 
Organization,  223. 

County  Occupation  Tax — 
Prohibited,.  278. 

Debts- 
Fidelity,  Guaranty  and  Surety  Company,  252. 
Mutual  Life  Insurance  Company,  155. 

Declaration — 

Reciprocal  indemnity  attorney  shall  be  filed,  440. 

Defense — 

Misrepresentation  in  policy  application,  280,  281,  282,  286. 
Technical  provisions  in  fire  policy,  184,  185. 
Workmen's  Compensation  Act,  297,  302. 

Definitions — 

Agents  of  insurance  companies,  258,  465. 

Association,  378. 

Average  weekly  wages,  378. 

Beneficiary,  68,  378. 

Board,  384. 

Company,  68. 

Conspiracy  in  restraint  of  trade,  553. 

Employe,  378. 

Employer,  378. 

Foreign  Companies,  68. 

Fraternal  Benefit  Societies,  485. 

Gross  premium  receipts,  275. 

Home  office  of  company,  68. 

Home  or  domestic  companies,  68. 

Insured,  68. 

Life,  Health  and  Accident  Companies,  68. 

Lloyds,  594. 

Lodge  system,  486. 

Monopoly,  552. 

Mutual  Accident  Companies,  395. 

Net  assets,  68. 

Policyholders,  68. 

Profits,  68. 

Representative  form  of  government,  487. 

Subscriber,  Workmen's  Compensation,  378. 

Texas  securities,  133,  134. 

Trust,  551. 

Workmen's  Compensation  Act,  316,  378,  384. 

Deposits — 

Approved  by  Commissioner,  97,   145,  252. 

Blue  Sky  Law,  under,  540,  549. 

Casualty  Companies,  227,  231,  234,  237. 

Commissioner  shall  keep  record,  104. 

Co-Operative  Savings  and  Contract  Loan  Companies,  589,  593,  594,  597,  605. 

Fidelity,  Guaranty  and  Surety  Companies,  250,  252,  254. 

Fire  Companies,  178,  426. 

Foreign  Companies,  124,,  125,  126,  127,  178,  250,  252. 

Home  Companies,  97,  98,  145,  227,  231,  234,  237,  250,  252,  254. 

Increased,  may  be,  105,  227. 

Interest  on,  237,  252. 


INDEX. 

Deposits — Continued. 

Liable  for  judgment,  126. 

Life  Companies,  reserve,  98,  103,  104,  105,  106,  107,  108,  109,  110,  112. 

Life,  Health  and  Accident  Companies,  capital  stock,  97,  145. 

Mutual  Fire,  Storm,  Lightning  and  Hail  Companies,  426,  434. 

Mutual  Life  Insurance  Companies,  154. 

Not  required,  when,  127. 

Reciprocal,  124. 

Reciprocal  Exchange,  440    (g). 

Trustee,  with,  252. 

Withdrawal,  105,  234,  237,  254;  426. 

Directors — 

Casualty  Companies,  59,  60,  61,  62,  63,  64,  65,  66,  225,  228. 
Choose  officers,  63,  153. 
Commissioner  or  clerk  ineligible,  8. 
Co-Operative  Life  Companies,  153,  154. 

Election  and  term  of  office,  59,  60,  61,  62,  66,  70,  153,  225,  226. 
Foreign  Companies,  122,  130. 
Fraternal  Benefit  Societies,  503. 
Investments,  loans  and  deposits,  82,  113. 
Keep  records,  65. 
Make  by-laws,  64,  153,  225. 
Meetings,  60,  61,  62. 
Misrepresentation  of  policy,  293. 
Mutual  Accident  Companies,  392,  394,  397. 
Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  410. 
Mutual  Hail  Companies,  431,  432,  435. 
Number  and  qualifications,  58,  70,  503. 
Purchase,  sale  or  loan,  by  or  to  companies,  82,  113. 
Quorum,  66. 

Resolution  of,  designating  person  to  employ  agents,  477. 
Vacancies,  66. 

Workmen's  Compensation,  Employers'  Insurance  Association,  351,  352,  353, 
354,  355,  357,  363,  369. 

Disbursements — 

Life  Companies,  86. 

Discrimination — 

Fire  Companies,  213,  214. 

Life,  Health  and  Accident  Companies,  289. 

Distribution  of  Funds — 

Fraternal  and  Benefit  Societies,  495,  502. 

Dividends — 

Casualty  Companies,  119,  236. 

Co-Operative  Savings  and  Contract  Loan  Companies,  606. 

Fire  Companies,  264,  265. 

Health  Companies,  119,  264,  265. 

Life  Companies,  84,  119,  159,  264,  265,  293. 

Marine  and  Inland  Companies,  264,  265. 

Misrepresentation  of,  293. 

Mutual  Accident  Companies,  396. 

Reciprocal  Exchange,  444. 

Surplus  profits,  119,  236,  293. 

Workmen's  Compensation  Act,  363,  366,  370. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  418. 

Mutual  Hail  Companies,  433. 

Mutual  Life  Insurance  Companies,   159. 

Unlawful,  84,  119,  236,  264,  265. 


INDEX.  245 

Domestic  Servants — 

Exempt  from  Workmen's  Compensation  Law,  298. 

Embezzlement — 

Agent  of  company,  481. 

Employers — 

Workmen's  Compensation  Act,  299,  300,  302,  303,  324,  325,  336,  342,  344, 
356,  357,  372,  378. 

Employes — 

Action  against  employer,  299,  300,  301,  302,  303. 

Assumed  risk,  297,  302. 

Contributory  negligence  shall  not  be  a  defense,  297,  302. 

Deceased,  leaves  legal  beneficiaries,  310. 

Deceased,  loaves  no  legal  beneficiaries,  313. 

Definition,  378,  379. 

Death  of  injured,  302,  303,  310  to  313,  319,  329,  331. 

Fellow  servant,  297,  302. 

Injured,  what  compensation  shall  receive,   301,   304  to  323,   326,   329,   330, 

334,  341,  342,  343,  349,  375. 
Examination  of,  before  board,  338. 
Number  necessary,  358,  359,  360,  361. 
Non-subscriber,  employes  of,  302. 
Record  of  injuries,  344. 
Suits  by,  302. 

Employers'  Liability — 

Reports  as  to  experience,  388,  389,  390. 
Reserve  liability  of  company,  388,  389,  390. 
Workmen's  Compensation  Law,  325,  375. 

Evidence — 

Fire  Marshal's  acts,  200. 

Instruments  and  certified  copies  of  records,  41. 

Insurance  Commission  Law,  218. 

Examinations — 
Agents,  36,  201. 
All  companies,  51,  474. 
Blue  Sky  Law,  549. 

Casualty  Companies,  51,  52,  53,  232,  233. 
Co-Operative  Savings  and  Contract  Loan  Companies,  586. 
Expenses,  by  whom  paid,  36,  74,  140,  152,  166,  250,  399,  411,  474,  517,  519, 

549. 

Fidelity,  Guaranty  and  Surety  Companies,  250. 
Fire  Companies,  51,  52,  53,  411,  419,  420. 
Fraternal  Benefit  Societies,  503,  517,  519,  520. 
Home  Companies,  51,  52,  53,  411,  419,  436,  503,  507,  517,  520. 
Life,  Health  and  Accident  Companies,  36,  37,  74,   140. 
Lloyds  Exchange,  579. 
Medical,  shall  make,  161. 
Mutual  Accident  Companies,  398,  399. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  411,  419,  420,  436. 
Mutual  Life  Insurance  Companies,  166,  167. 
Reciprocal  Exchanges,  444. 
Reports  made  and  filed,  53. 
Reports  published,  19. 
Resident  agent's  law,  474. 
State  Fire  Insurance  Commission,  201. 
When  and  how  made,  36,  37,  51, -52,  53,  74,  140,  152,  167,  168,  232,  411,  419, 

436,  517,  519,  549. 


246  INDEX. 

Excess  Insurance — 

Unauthorized  companies,  in,  182   (4,  5,  6). 

Executor — 

Fidelity,  Guaranty  and  Surety  Companies,  250. 

Exemplary  Damages — 

Workmen's  Compensation  Law,  303,  375. 

Exemption  of  Certain  Societies — 
Blue  Sky  Law,  548.- 
Fraternal  Benefit  Society  Law,  147,  151,  275,  292,  488,  522,  523,  524. 

Expenses — 

Blue  Sky  Law,  incident  to  stock  sales,  527,  529,  530. 

Co-Operative  Savings  and  Contract  Loan  Companies,  605. 

Examinations,  36,  74,  140,  152,  166,  250,  399,  411,  474,  517,  519,  549. 

Fire  Marshal,  199. 

Fraternal  Benefit  Societies,  500,  502,  517,  519. 

Insurance  Commission,  193,  194,  220,  278. 

Local  Mutual  Aid  Societies,  524. 

Mutual  Accident  Companies,  401. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  417. 

Mutual  Hail  Companies,  433,  434,  436. 

Mutual  Life  Insurance  Companies,  157. 

Workmen's  Compensation  Act,  313,  337. 

Fees — 

Assessment  Companies,  150. 

Attorneys  in  anti-trust  suits,  561,  573. 

Blue  Sky  Law,  529,  549. 

Casualty  Companies,  245. 

Certificate,  46,  245. 

Certificate  of  authority,  47,  76,  164,  245,  410,  425,  437,  506,  507,  525. 

Certified  copy  of  records,  46,  47,  70,  225,  394,  400. 

Co-Operative  Savings  and  Contract  Loan  Companies,  596. 

Examinations,  47,  517,  519. 

Excess  insurance  broker,  182   (4). 

Fee  book,  48. 

Filing  documents,  11,  47,  70,  75,  150,  164,  225,  245,  250,  394,  425,  437. 

Filing  statement,  Fidelity,  Guaranty  and  Surety  Company,  250. 

Fraternal  Benefit  Societies,  503,  506,  507,  525. 

Industrial  Accident  Board,  346. 

Lloyds  Exchange,  577  to  582. 

Mutual  Accident  Companies,  394,  400. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  461. 

Mutual  Fire,  Storm,  Lightning  and  Hail  Companies,  409,  410,  425. 

Mutual  Hail  Insurance  Companies,  430,  437. 

Mutual  Life  Insurance  Companies,  164. 

Must  be  paid,  266. 

Printers'  Mutual  Companies,  452. 

Reciprocal  indemnity  contracts,  448. 

Registration  of  policies,  107. 

State  Treasurer,  paid  over  to,  48,  107. 

Valuing  policies,  47. 

Federal  Court — 

Removal   of   suit,   33. 

Fellow  Servant's  Negligence — 

Workmen's  Compensation  Law,  no  defense,  297,  301. 


INDEX.  247 

Felony — 

Agent,  481. 

Anti-trust  laws,  563,  567,  569,  570. 

Co-Operative  Savings  and  Contract  Loan  Companies'  officers  and  agents,  619. 

False  statement  or  report,   129. 

Misappropriation  of  funtfs,  421. 

Mutual  Accident  Companies,  407. 

Officer's  false  statement,   129. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  421. 

Mutual  Life  Insurance  Companies,   154. 

Fidelity,  Guaranty  and  Surety  Company — 

Administrator,  executor  or  guardian,  may  act  as,  250. 

Agents,  251,  258,  462  to  484. 

Annual   statement,   252. 

Assets,  252. 

Assignee  may  act  as,  250. 

Attorney  for  service,  251,  252,  256. 

Bond  in  lieu  of  deposits,  254. 

Bonds,  may  be  surety  on,  250,  251,  252. 

Bond  of  State  or  county  official,  250,  251. 

Capital  stock,  50,  51,  55,  57,  250,  252,  291. 

Cancellation  of  bond,  254,  260. 

Certificate  of  authority,  51,  253,  257,  259,  261. 

Charter,  49,  50,  252. 

Consolidation  of  companies,  267  to  273. 

Deposits,  250,  252,  254,  257. 

Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66. 

Dissolution  when  companies  consolidate,  272. 

Examination,  51,  52,  53,  250. 

Fee  for  filing  copy  of  statement,  250. 

Fiduciary  and  depository  business,  may  do,  250. 

Foreign,  250,  252. 

Home  Companies,  in  Texas  only,  deposit,  252. 

Inquiries,  must  answer,  42. 

Interest  on  deposits,  252. 

Investments,   55,   56,   57. 

Liabilities,  252. 

Loss,  failure  to  pay,  257. 

Name,  50. 

Organization,  49,  250,  291. 

Penalty  for  accepting  bond  made  by  unlicensed  company,  259. 

Penalty  when  bond  is  improperly  canceled,  260. 

Powers,  250,  251. 

Publication  of  statement,  251. 

Public  use,  charged  with,  262. 

Purpose  for  which  incorporated,  249,  250. 

Receiver,  may  act  as,  250. 

Refusal  to  guarantee  again,  260. 

Reinsurance,  254. 

Reserve,  16,  252,  254. 

Resident  agents,  470  to  474. 

Securities  deposited,  250,  252,  254. 

Service  of  process,  252,  256. 

Surrender  of  certificate  of  authority,  254. 

Surety  or  guarantor,  may  act  as,  250,  251,  252. 

Taxation,  275  to  279. 

Trustee,  may  act  as,  250. 

Unlicensed  companies,  accepting  bonds  made  by,  259. 

Venue,  suit  on  bonds,  251,  256. 

Withdrawal  from  bond,  255,  260. 


248  INDEX. 

Fiduciary  and  Depository  Business — 

Fidelity,  Guaranty  and  Surety  Companies  may  do,  250. 

Fire  Companies — 

Agents,  201,  213,  217,  462  to  484. 

Annual  statement,   180,   181. 

Assets  shown  in  annual  statement,   181    (5). 

Association  of  companies,   266. 

Automobiles,  may  insure,  170. 

Bond,  176  to  179. 

Capital  stock,  50,  51,  55,  57,  171,   172,   173,  174. 

Certificate  of  authority,  51,   182,   191,  261. 

Charter,   49,   50,   51,   271. 
»        Co-insurance   clause,    186,    187,   209. 

Companies   subject   to   commission   law,    191. 

Consolidation  of  companies,  267  to  273. 

Directors,  58,  59.  60,  61,  62,  63,  64,  65,  66. 

Disbursements  shown  in  annual   statement,    181    (8). 

Dissolution  when   companies    consolidate,   272. 

Dividends,   264,   265. 

Examination,  51,   52,  201. 

Excess  insurance,  182,  470. 

Expenses  of  Insurance  Board,  220,  278. 

Fees  and  taxes  must  be  paid,  266. 

Fire  loss,  may  insure,   170. 

Foreign,   176,   177,   178,   179. 

Impairment  of  capital  stock,   172,   173,   174. 

Income  shown  in  annual  statement,  181    (7). 

Inquiries,  must  answer,  42. 

Insurance  Board  Law  repealed,    189. 

Investments  and  loans,   55,  56,   175. 

Joint  policies,   266. 

Laws  governing  other  companies,  290. 

Liabilities   shown  in  annual  statement,   181    (6). 

Life  and  health  business,  cannot  do,  28,  96. 

Losses,  record  and  classification  of,  195. 

Marine  loss,   may   insure,    170. 

Mortgagee,  interest  in  policy,    188. 

Mutual,  219,  278,  408  to  427,  451,  452,  453. 

Name,  49. 

Organization,  49,  408,  409,  410. 

Penalties,  214,  216,  217,  264,  420,  421. 

Policy,   183,  184,  185,'  186,  187,  188,  208,  209,  215,  266,  273. 

Powers,  170,  175. 

Premium   collections,   215. 

Premium  rates,  regulation  of,   190,   194,   195,  202,   203,  204,   205,  206,  210, 
211,  213,  214,  215. 

Publication  of  certificate  of  authority,  263,  274. 

Real  estate  holdings,   175. 

Rebates   and  discriminations,   213,   214. 

Reinsurance,    170,    177,    182. 

Reserve,   16,  264,  418. 

Resident  agents,  470  to  474. 

Risk,  limit  of  one,  182. 

Securities  deposited  in  lieu  of  bond,   178. 

Surplus   profits,   264. 

State   Fire  Insurance  Commission  Law,  221,   278. 

Taxation,  266,  275,  276,  277,  278,  279. 

Technical  provisions   in  policies,   184,    185. 

Unauthorized   companies,    182,   465. 

Valued  policy,  183. 


INDEX.  249 

Fire  Losses — 

Annual,  to  be  ascertained  and  make  record,  195. 

Fire  Marshal — 

Authority  and  powers  of,  198,  199,  200. 

Duties  of,  197. 

State  Fire  Insurance  Commission,   196,   197,   198,   199,  200. 

Foreign  Companies —  .* 

Annual   statement,    121,   180,   181,  207,  611. 

Anti-trust  laws,  558. 

Bond,  176,  177,   178,   179,  617. 

Blue  Sky  Law,  530,  543,   544. 

By-laws,   122,  149,  507. 

Charter,  122,  149,  507,  612. 

Conditions  under  which  they  operate,  295. 

Defined,  68. 

Directors,   122. 

Fidelity,  Guaranty  and  Surety  Companies,  252. 

Fire  Companies,   176,  177,   178,   179. 

Fraternal  Benefit  Societies,  507,  519,  521. 

Investments,   128,  132,   133,  134,   135,   144,   146. 

Life,  policy  may  contain,  89. 

Losses,  94,  95. 

Mutual  Fjre,  Lightning,  Hail  and  Storm  Companies,  424. 

Officers,  122. 

Suits  on  policies,  92. 

Forfeiture— 

Casualty  Companies,  unlicensed,  238. 

Charter  and  franchise,  119,  400,  406,  420,  503,  515,  555,  556,  557,  559,  560. 

Fraternal   Benefit  Societies,   503,   515. 

Mutual  Accident  Companies,  406. 

Form  Number — 

Policies  shall  have  printed  thereon,   100. 

Fraternal  Benefit  Societies,  485  to  526 — 
Accident,  489. 

Accumulation  basis  of  valuation,  516. 
Advanced  payment  during  organization,   503. 
Affidavit  relating  to  organization,  503. 
Age  limit  of  members,  592,  593,  595. 
Agents,  525. 

Amendments  to  charter,  constitution  and  laws,  499,  503,  504,  513. 
Annual  license,   506,   507. 
Annual  statements,  496,   507,  514. 
Annual  valuation,  489,  514,  515,  516. 
Application  for  membership,  498,  503. 
Assessments,  or  premiums,  494,  500,  503,  514,  516. 
Attorney  for  service,   507,  508. 
Attorney  General,   Commissioner  report  to,   517. 
Beneficiaries,  490,  491,  495,  498,  500,  511,  512. 
Benefits  489,  493,  500,  512,  516. 
Benefit  not  attachable,  512. 
Bond,  501,  503. 
Burial  Association,  524. 

Certificate  of  authority,  503,  506,  507,  515,  519,  521,  525. 
Certificate  of  compliance,  507. 
Certificate  or  policy,  489,  494,  495,  497,  498,  499,  503,  507. 


250  INDEX. 

Fraternal  Benefit  Societies,  485  to  526-— Continued. 
Charter,  499,  503,  507,  511. 
Children's  insurance,  493  to  499. 
Constitution,  486,  487,  493,  499,  501,  503,  504,  507. 
Credits  to  individual  members,  516. 
Death  and  disability  benefits,  489,  493,  494,  500. 
Defined,  485. 
Deferred  payments,  500. 
Disease,  489. 

Distribution  of  funds,  502. 
Dissolution,  517,  518. 

Eleemosynary  and  educational  societies  may  be  beneficiaries,  500. 
Enjoined  from  carrying  on  business,  517. 
Examination,  503,  507,  517,  519,  520. 
Exceeding  its  powers,  517. 

Exempt  from  certain  laws,  147,  151,  275,  292,  488. 
Exemptions,  147,  151,  275,  292,  488,  522,  523,  524. 
Expenses,  500,  502,  507,  517,  519. 
Extra  assessments  may  be  levied,  514. 
Extended  protection,  489. 
Failure  to  comply  with  law,  517,  521. 
False  statements,  525. 
Fees,  506,  507,  525. 
Fixed  liabilities,  500. 
Foreign,  507,  519,  521. 
Forfeiture  of  charter,  479,  503. 

Funds,  495,  496,  497,  500,  501,  502,  505,  510,  514,  515,  516. 
Future  security,  provisions  to  insure,  514,  515,  516. 
Funeral  benefits,  489. 
Governing  body,  487,  503,  505,  509. 
Installments  of  claims,  500. 
Investment  of  funds,  147,  501,  507. 
Laws  of  association,  485,  486,  487,  490,  493,  497,  499,  501,  503,  504,  507,  510, 

513,  514. 

Laws  repealed,  526. 

Limitation  as  to  amount  of  benefit  certificate,  522. 
Loans  of  local  lodges,  501. 
Loan  on  policy,  489. 
Local  Mutual  Aid  Societies,  524. 
Lodge  system,  485,  486,  493. 
Maintaining  a  certain  financial  condition,  515. 
Medical  examination,  492,  494,  522. 
Meetings  of  governing  body,  487,  509. 
Meetings  of  subordinate  lodge,  486. 

Membership,  492,  498,  503,  505,  510,  511,  515  to  517,  522,  524. 
Mergers  and  transfers,  496,  505. 
Minimum  assessment  collection  in  organizing,  503. 
Misdemeanor,  525. 
Mortuary  funds,  502,  503. 
Name  of  association,  503. 
Notice  of  actions  against,  517,  521. 
Number  of  members  necessary,  503,  517,  522,  524. 
Office  location,   509. 

Officers  and  directors,  487,  503,  510,  511. 
Old  age,  489. 

One  hazardous  occupation,  522. 
Organization,  503. 
Paid  up  protection,  489. 
Payment  of  benefits,  510. 
Penalties,  519,  521,  524. 
Periodical  contributions,  500,  514. 


INDEX.  251 

Fraternal  Benefit  Societies,  485  to  526— Continued. 
Personal   liability,   officers  and  members,   510. 
Power  of  attorney,  appointing  attorney  for  service,  507,  508. 
Powers  of  associations,  503,  504. 
Preliminary  certificate  of  authority,   503. 
Proceedings  for  dissolution,  521. 
Process,  service  of  legal,  507,  508. 
Publication  of  affairs,  520. 
Purpose  of  organization,  503. 
Quo  warranto  action,  517. 
Receiver  appointed,  517,   518. 
Refusal  of  license,  507. 
Reincorporation,   504. 
Reinsurance,  505. 

Religious   or  charitable  societies,  491,   522. 
Report  of  valuation,  514. 
Representative  form  of  government,  485,  487. 
Reserve,  489,  495,  500,  503. 

Revocation  or  refusal  of  license,  507,  515,  519,  521. 
Separate  class  of  members  or  certificates,  493  to  498,  515. 
Separate  jurisdiction  plan,   511. 
Solvency,  514,  516. 
State  organization,  511. 
Subordinate  lodge,  investments  by,  501. 
Supreme  governing  body,  487. 
Surplus,  501,  516. 
Tabular  basis  of  valuation,  516. 
Tables  of  mortality,  489,  500,  503,  514,  516. 
Taxes,  exempt  from  occupation,  523. 
Term  certificate,  489. 
Temporary  or  permanent  disability,  489. 
Tombstones,  489. 

Transfer  or  consolidation  of  membership,  505. 
Valuation  of  policies,  489,  500,  503,  514,  515,  522. 
Waiver  of  constitution  and  laws  forbidden,  511. 
Whole  family  insurance,  493  to  498. 
Withdrawal  equities,  489. 

Funds — 

Fraternal   Benefit   Societies,   495,   496,   497,   500,   501,   502,    505,    510,    514, 

515,  516. 

Handling  of,  by  directors  or  officers,  114. 
Mutual  Companies  may  invest,  416,  434. 

Garnishment — 

Compensation  exempt  from.  299. 

Fraternal  Benefit  Society  benefit  exempt,  512. 

General  Basis  Schedule — 

State  Fire  Insurance  Commission,   194,  201,  202,  203,  206,  211. 

Governor — 

Insurance  Commission,  appoints  members,   192. 
Reinsurance  contracts,  approves,   177. 
Report  of  Commissioner,  25. 

Government — 

Representative  form  of,   defined,   487. 


252  INDEX. 

Gross  Premium  Receipts — 
Defined,  275. 

Reported,  137,  140,  141,  275,  276. 
Taxation,  137,   138,   140,   141,  275,  276. 

Guardian — 

Fidelity,  Guaranty  and  Surety  Companies  may  act  as,  250. 
Workmen's   Compensation  Act,   327. 

Hail  Companies — 

Mutual,  29,  407  to  437. 

Health  Companies — 

Annual  statement,  75,   121,   129. 

Association  of  companies,   266. 

Capital  stock,  69,  114,  118,   123,  227. 

Certificate   of  authority,   74,   76,   233,   243,   263. 

Charter,  49,  69,  70,  71,   122,  224,  271. 

Consolidation  of  companies,  267  to  273. 

Defined,  68. 

Deposits,  97,    124,   125,   126,   127. 

Directors,  70,  82. 

Dissolution  when  companies  consolidate,  272. 

Dividends,   119,  264,  265. 

Fees  and  taxes  must  be  paid,  266. 

Fire,   Marine,   Lightning,   Tornado   and  Inland  business   cannot   do,   28, 

Foreign,   121   to   131. 

Home  office  location,  50,  69. 

Incorporation  of,  69,  223. 

Industrial    Insurance,    118. 

Inquiries,  42. 

Investments  and  loans,  55,   56,   128. 

Joint  policies,  266. 

Losses,  when  payable,  94,  95. 

Mutual,  123,  402. 

Organization,  69,  223. 

Penalties,  265. 

Policies,  suits  on,  92. 

Policy  forms,  116. 

Publication  of  certificate  of  authority,  263. 

Real  estate  holdings,  81. 

Reinsurance,  83. 

Reserve,  16,  264. 

Service  of  process,  93. 

Surplus  profits,   119,  264. 

Taxation,  91,  97,  266,  275  to  278. 

Venue  in  suits,  92. 

Hearings — 

Complaints  to  Insurance  Board,   210,  211. 

Home  Companies — 

Annual  statement,   75. 

Capital  stock,  50,  54,  55,  57,  69,  222,  291. 

Charter,  49,  50,  51,  69,  224,  225,  392,  393,  410,  430,  431,  503. 

Defined,   68. 

Directors,  59,  60,  61,  62,  63,  64,  65,  66,  70,  82. 

Dividends,    119,   264,   265. 

Examinations,  51,  52,  53,  411.  419,  436,   503,  507,  517,  520. 

Investments,  55,  56,  57,  80,   113,   154,   175. 


INDEX.  253 

Home  Companies — Continued. 
Liability  Companies,  290,  291. 
Losses,  94,  95. 

Mutual  Accident,  391   to  407. 
Policies,  suits  on,  92. 
Reserve,  264. 
Service  of  process,  93. 
Taxation,  91,  97. 

Home  Office  of  Companies — 
Denned,  68. 

Fraternal  Benefit  Societies,   501. 
Investments  and  loans,  133. 
Location  named  in  charter,  50,  69,  392,  410. 
Mutual  Accident  Companies,  392. 

Impairment  of  Capital  Stock — 

Commissioner's  duty,  18,  121,  172,  173,  174. 
Fire  and  Marine  Companies,   173,   174. 
Life,  Health  and  Accident  Companies,   114. 

Indemnity  Contracts — 
Reciprocal,  438  to  450. 

Industrial  Accident  Board,  311,  329,  335  to  349,  381,  384— 

Appointment,  335. 

Clerical  help,  335,  337. 

Expenses,  335,  337. 

Fees,  346. 

Members,  336,  337. 

Officers  and  offices,  337. 

Notice  to,  339,  344,  348. 

Quorum  and  seal,  345. 

Reports  of  injuries,  305. 

Refund  of  part  of  premium,  381. 

Rules  and  powers,  306,  307,  308,  321,  329,  330,  338,  340,  341,  346  to  349. 

Industrial  Life,  Accident  and  Health  Companies — 
Capital  stock  of  company,   118. 
x  Organization  of  company,   118. 
Policy  forms,    116. 

Ineligibility  of  Certain  Persons,  8 — 

Inquiries — 

Companies  must  answer,  42. 

Injuries —  * 

Action  for,  297,  302. 

Defense  to  action  for,  297,  302. 

Workmen's  Compensation,  297  to  305,  316,  317,  319,  320,  339,  344,  371,  374. 

Insured — 

Defined,  68. 

Interest  on  Deposits — 

Commissioner  may  permit  collection,   106. 

State  Treasurer  may  permit  collection,  .97,  237.          • 


254:  INDEX. 

Investments  and  Loans — 

Capital  stock  and  other  funds,  55,  56,  57,  80,  113,  128,  132  to  136,  227,  240. 

Casualty  Companies,  227,  240. 

Co-Operative  Savings  and  Contract  Loan  Companies,  607,  608,  609. 

Directors,  82,   113. 

Exempt  from  investments,  146,   147. 

Foreign  Companies,  128. 

Fraternal  Benefit  Societies,  147,  501,  507. 

Home  Companies,  all  kinds,  55,  56,  78. 

Life  Companies,  80,  113,  132,  133,  134,   135,  142,  144,  146,   148,  155. 

Loaning  funds  only,   148. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  416. 

Mutual  Hail  Companies,   434,  436. 

Mutual  Life  Insurance  Companies,  153,  157,  163. 

Penalty  for  failure  to  make,   144. 

Taxes  reduced  by  investments,  137,  277. 

Schedule  to  be  filed,  136. 

Texas  reserves,   132,   133,   134,   135,   146. 

Texas  securities,  132,  133,  134,  135,  146. 

Judgments — 

Deposit  liable  for,  126. 

Liability,  under  Workmen's   Compensation  Law,  375. 

Must  be  paid,  when,  44,  95,  257,  375. 

Laborers — 

Exemption  of  certain,  from  Workmen's  Compensation,   298. 

Legislature — 
Report  to,  43. 

Liability- 
Fraternal  Benefit  Societies,   500,   510. 
Total  permanent,  312,  316,  317,  327,  329. 
No  personal,  510. 

Mutual  Accident  Company,  401,  402. 

Mutual   Burglary  and  Loss   in  Transportation   Companies,   458. 
Mutual   Fire,  Lightning,  Hail  and  Storm  Companies,   414,  415. 


Liability  Insurance'  Compani« 
Agents,  462  to  484. 
Capital  stock,  291. 
Organization,  223,  291. 
Reports  as  to  experience,  388,  389. 
Reserves,  how  calculated,   388,  389,  390. 
Resident  agents,  470  to  474. 
Workmen's  Compensation,  325,  380. 

License — 

Co-Operative  Savings  and  Contract  Loan   Companies,   5851 

Fraternal  Benefit  Societies,  503,  506,  521,  525. 

Lloyds  Exchange,  576. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  409,  410,  420,  424. 

Mutual  Hail  Companies,  430. 

Revocation  of  license,  18,  20,  33,  36,  44,  111,  119,  161,   182    (3),  212,  216, 

233,  257,  261,  399,  411,  583,  600/606,  620. 
Texas  Employers'  Insurance  Association,  333,  360,  362. 

Lien — 

Fire  Companies  cannot  avoid  responsibility,  208. 


INDEX.  255 

Life  Companies — 

Agents,   111,  142,  462  to  484. 

Annual  statement,  75,  121,  136,  137. 

Assessment,  150,  151,  292. 

Association  of  companies,  266. 

Attorney  for  service,  130,  131. 

Beneficiaries,  120. 

Capital  stock,  69,  114,  118,  123,  145. 

Certificate  of  authority,  75,  77,  135,  140  to  143,  148,  153,  263. 

Charter,  28,  69,  70,  71,  122,  152,  271. 

Commissions,  shall  not  pay  officers,   111. 

Consolidation  of  companies,  267  to  273. 

Corporation  cannot  be  agent,  476. 

Deposits,  97,  98,  103,  105,  106,  108,  109,  110,  113,  124,  125,  126,  127,  145,  154. 

Defined,  68. 

Directors,  70,  82,  113,  122,  152,  153,  477. 

Discrimination,  289. 

Disbursements,  86. 

Dissolution  when  companies   consolidate,   272. 

Dividends,  84,  119,  264,  265. 

Estimates  on  policies,  293. 

Examinations,  36,  37,  74,  140,  152. 

Fees,  47,  70,  76,  107,  150,   164,  265. 

Fire,  Marine,  Lightning,  Tornado  and  Inland  business,  cannot  do,  28,  96. 

Foreign,  121  to  131. 

Form  numbers,  100. 

Home  office  location,  69. 

Industrial  Insurance,  118. 

Inquiries,  must  answer,   42. 

Investments  and  loans,  80,  113,  128,  132  to  136,  142,  144,  145,  148,  154. 

Joint  policies,  266. 

Laws  govern  other  companies,  290. 

Legal  reserve,  132,  134,  135,  136. 

Loan  business,  only,  148. 

Losses,  when  payable,  94,  95. 

Misrepresentation  of  policies,  280,  281,  282,  286,  293. 

Mutual,  123. 

Mutual  Life  Insurance  Companies,   152  to   169. 

Name,  69,  152. 

Officer  to  employ  agents,  477. 

Officers,  122. 

Organization,  69,  152. 

Penalties,  265,  289. 

Pension,  shall  not  grant,  85. 

Policies,  Foreign  Company,   89. 

Policy,  legal  requirements  of,  87,  89,  282,  283,  286,  287,  288. 

Policy,  shall  not  contain,  88,  283  to  288. 

Policies,  shall  contain,  88,  282,  283  to  288. 

Policies,  suits  on,  92,  280,  281,  282,  286. 

Policy  forms,  100,  115,  116,  160. 

Premiums,  report  of,   137,   139,   140. 

Preliminary  term  policy,   159,   287. 

Publication  of  certificates  of  authority,  263,  274. 

Real  estate  holdings,  81,  132,   154. 

Registration  certificate  of  deposit,  99. 

Registration  fees,   107. 

Rebating,  289. 

Reinsurance,  83,  109. 

Reinsurance  business  only,   146. 

Reserve,  34,  98,   103,   105,   106,  108,   158,  264. 

Salaries  of  officers,  85. 

f 


256  INDEX. 

Life  Companies — Continued. 

Service  of  process,  93,   130,   131. 

Special  or  board  contracts,  289. 

Sub-standard  risks,  110. 

Surplus  profits,  119,   159,  264. 

Taxation,  91,  97,  137,  138,  140,   141,  266. 

Texas  reserves,   132,   133,    135,   136,   137. 

Texas  securities,   132,   133,   134,   135,   136. 

Voucher   showing  disbursements,   86. 

Venue   in   suits,   92. 

Withdrawn,   desiring   renewal   license,   141. 

Withdrawn,  may  maintain  agents,   142. 

Lightning  and  Storm  Companies — 
Capital   stock,  50,   51,  55,  57. 
Certificate  of  authority,  51. 
Charter,  49,  50,  271. 
Consolidation  of  companies,  267  to  273. 
Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66. 
Dissolution   when   companies   consolidate,   272. 
Examination,   51,   52. 
Inquiries  must  be  answered,  42. 
Investments  and  loans,  55,  56. 
Laws  govern  other  companies,  290. 
Life  business,  cannot  do,  28,  96. 
Mutual,  408  to  427. 
Name,  50. 
Reserve,   16. 

List- 
Names  of  agents,  etc.,  77,  477. 

Limitation — 

Time  within  which  to  bring  suit,  284. 

Live  Stock  Companies — 
Capital  stock,  222. 
Certificate  of  authority,  51. 
Charter,  49,  271. 

Consolidation   of  companies,   267   to   273. 
Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66. 
Dissolution  when  companies  consolidate,  272. 
Examination,  51,  52. 
Inquiries,   must  answer,   42. 
Investments  and  loans,  65,  66. 
Name,  50. 

Organization  and  operation,   222. 
Reserve,   16. 
Taxation,  275  to  279. 

Loan  and  Reserve  Fund — 

Co-Operative  Savings  and  Contract  Loan  Companies.  605. 

Local  Mutual  Aid  Societies — 
Advertising  matter,  524. 
Annual  reports,  524. 
Burial  associations,   524. 
Business   limited  to  certain  territory,   524. 
Examinations,  524. 
Expenses,   524. 


INDEX.  257 

Location  of  Office— 
Blue  Sky  Law,  529. 
Casualty  Companies,  224. 
Fraternal   Benefit   Societies,   503,   507. 
Home  Insurance  Companies,  50. 
Lloyds  Exchange,   575,   576. 
Mutual  Fire,  Lightning  and  Hail  Companies,  409,  410. 

Lloyds  Exchange — 

Attorney  in  fact,  575. 
Attorney  for  service,  582. 
Examination,  579. 
Fee,  577,  582. 
Lloyds  defined,  574. 
Net  assets,  578,  581. 
Organization,  576. 
Penalties,  579,  583. 
Subscribers,   580. 
Suits,  582. 

Losses — 

Agent  shall  be  liable  to  policyholder  for,  468. 

Classification  by  Insurance  Commission,    195. 

Failure  to  pay,  95,  257. 

Fidelity,  Guaranty  and  Surety  Companies,  failure  to  pay,  257. 

Fire,  195,  197,   198. 

Mutual  Accident  Companies,   401,  405. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Company,  456. 

Mutual   Fire,   Storm  and  Lightning   Companies,   414. 

Mutual  Hail   Companies,   434,   436. 

Mutual  Life  Insurance  Companies,   157. 

Reciprocal  indemnity  contracts,   444. 

Shall  be  paid  when,  94. 

Lump  Sum  Payment — 

By  Industrial  Accident  Board,  329. 

Marine  and  Inland  Companies — 
Agents,  462  to  48*4. 
Annual  statement,    180,    181. 
Association  of  companies,  266. 
Capital  stock,  50,  51,  55,  57,  173,  174. 
Certificate  of  authority,  33,  51,   182,  263. 
Charter,  49,   50,  271. 
Consolidation  of  companies,  267  to  273. 
Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66. 
Dissolution  when  companies  consolidate,  272. 
Dividends,  264,  265. 
Examination,  51,  52. 
Excess  insurance,    182    (4,  5,  6),  470. 
Fees  and  taxes,  must  be  paid,  266. 
Inquiries,  must  answer,   42. 
Investments  and  loans,   55,   56. 
Joint  policy,  266. 
Laws  govern  other  companies,  290. 
Life  business,   cannot  do,  28,   96. 
Name,  50. 
Organization,  49. 

Penalties  for  violating  laws,  266,  464. 
Powers,   170,   175. 


258  INDEX. 

Marine  and  Inland   Companies — Continued. 

Publication  of  certificate  of  authority,  263,  274. 

Real  estate  holdings,   175. 

Reinsurance,   170,   177,   182    (2). 

Reserve,   17,  264. 

Resident  agents,   470  to   474. 

Risk,  limit  of  one,  181,  182    (1). 

Surplus,  how  invested,  56. 

Surplus  profits,  264. 

Taxation,  275  to  279. 

Unauthorized  companies,   182    (4,  5,   6). 

Unearned  premiums,  264. 

Medical  Examinations — 

Fraternal   Benefit  Societies,  492,   494,  522. 
Mutual  Life  Insurance  Companies,   161. 

Meetings — 

Casualty  Companies,  225,  268. 

Fraternal    Beneficiary   Associations,    486,    487,    509. 

Mutual  Accident  Companies,  396. 

Mutual  Fire,  Lightning,  Hail  and  Storm,  413. 

Mutual  Life  Insurance  Companies,   153,  167. 

Policyholders,   153,   167,  396. 

Stockholders,  268. 

Texas  Employers'  Insurance  Association,  352,  357,   358. 

Membership — 

Fraternal  Benefit  Societies,  490,  503,  510,  511,  516,  517. 

Lloyds  Exchange,  574. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Company,  413,  418. 

Merger  and  Transfers — 

Fraternal   Beneficiary  Association,   496,   505. 

Misappropriation  of  Funds — 

Mutual  Insurance  Companies,  421. 

Misdemeanor — 

Agents,   289,  466,  479,  480,  482,  525,  545,  583,  618. 

Blue  Sky  Law,  545. 

Co-Operative  Savings  and  Contract  Loan  Companies,  618,  619,  620. 

Fraternal  Benefit   Societies,   525. 

Insurance  Commission  Law,  217. 

Lloyds  Exchange,   583. 

Medical  examination,   161. 

Mutual   Fire,  Lightning,  Hail   and  Storm   Companies,   421. 

Mutual   Life   Insurance   Companies,    161. 

Rebates  and  discriminations,  214,  289. 

Reciprocal   indemnity  contracts,  446. 

Misrepresentation — 

Application  for  policy  must  be  material,  282,  286,  294. 

Blue  Sky  Law,  538. 

Fraudulently  made,   286,   469. 

Pay  roll,  Workmen's  Compensation,   382. 

Policy  forms,  benefits,  dividends  or  surplus,  293. 

Stocks,  sale,  538. 


INDEX.  259 


Monopoly- 
Defined,  552. 

Penalties,  555,  557,  561,  563,  567  to  571. 
Prohibited,  554. 

Municipal  Occupation  Tax — 
Prohibited,  277. 

Mutual  Accident  Companies — 
Act,  subject  to  this,  395,  406. 
Advance  funds,  must  be  deposited  in  bank,  393. 
Admission   fees,  dues  and  assessments,  395,  401. 
Affidavits   of   incorporators,    393. 
Annual  statement,  400. 

Applications,  must  have  200  to  organize,  393,   402. 
Assessment  plan,  392. 
Assessments,   395,   401,   402. 

-     Attorney  General,   charter  and  affidavits  presented  to,   393. 
Beneficiary,   change   of,   404. 
Benefits,  401. 

By-laws,  394,  396,  397,  401,  404,  405. 
Capital  stock,  have  none,  392,  396. 
Certificate  of  authority,  394. 
Charter,  392,  393,  394,  400. 
Commissioner's   duties,   394,    399. 
Definition,  395. 
Directors,   392,   394,   397. 
Dividends,   396. 
Examination,   398,   399. 
Exempt  from  certain  laws,  292. 
Expense  fund,  401. 
Fees,  394,  400. 

Forfeiture  of  charter  and  franchises,  400,  406. 
Funeral  benefit,  402. 
Health  insurance,  402. 
Insurance  in  force  at  organization,  393. 
Investment  and  loans,  401. 
Liability,  limit  of,  405. 
Lodge  system,   none,   395. 
Losses,  401,  405. 
Meetings,  396. 

Members,  396,  397,  398,  403. 
Name  of  company,  392. 
Notice  of  assessment,  403. 
Notice  of  by-law  adoption,  397. 
Office  location,  392. 
Organization,  391,  393. 
Penalties,  406,  407. 
Policy,   395,  401,   405. 
Powers,  394,  395. 
Profits,   396. 
Reserve   fund,   401. 
Salaries  of  officers,  396. 

Sickness  or  disease,  may  insure  against,  402. 
Term  of  existence,  392. 
Workmen's  Compensation,   380. 


260  INDEX. 

Mutual  Burglary,  Bobbery  and  Loss  in  Transportation  Companies — 
Admitted  to  do  business,  454. 
Agents,  456. 

Annual  report,  456,  460. 
Assessments,  458. 
Assets,  456,  460. 
Attorney  for  service,  459. 
Business  limited,  457. 
Certificate  of  authority,  456. 
Charter,  456. 
Fees,  461. 
Impairment,  456. 
Liability  of  policyholders,  458. 
Limitation  of  business,  457. 
Organization,   454. 
Penalties,  460. 
Policyholders,   458. 
Premiums,  458. 

Prerequisites  to  transacting  business,  455,  456. 
Membership  fees,  458. 
Reserve,   reinsurance,   457. 
Service  of  process,  459. 
Statement,  456,  460. 
Taxes,,  461. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  408  to  427 — 
Affidavit,  409,  410. 

Application  for  preliminary  permit,  409. 
Application  for  policies,  must  have,  409. 
Annual  premium,  414,  415. 
Annual  savings,  ten  per  cent  to  surplus,  415. 
Annual  statement,  412,  427. 
Assets  of  Foreign  Companies,  29,  424. 
Assessments,  414,  415,  420. 
Attorney  General,  report  to,  411,  420. 
Benefits,  shall  share,  413. 
Bonds  of  officers,  415. 
Business  office,  409,  410. 
By-laws,  410,  414,  415. 

Certificate  of  authority,  409,  410,  411,  420,  423,  424. 
Charter,  410,   420. 

Commissioner's  duties,  409,  410,  411,  414,  420,  423  to  425. 
Deposits,  426. 

Declaration,  as  to  withdrawal  of  securities,  426. 
Directors,   410,   414. 
Dividends,  418. 
Examination,  419,  420. 
Expenses,  414,  417.  ' 
Failure  to  report   condition,   421. 
False  statement,  421. 
Fees,  409,  410,  425. 
Felony,  421. 

Fire  Companies,   laws   governing   stock,   422. 
Foreign  Mutual  Companies,  424. 
Forfeiture  of  charter,  411,  420. 
Funds,  416. 
Insolvency,  411. 

Insurance  in  force  before  granting  charter,  410. 
Investment  and  loans,   416. 
Liabilities,   414,  415. 
Losses,   414. 


INDEX.  261 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies — Continued. 
Meetings  of  policyholders,  413. 
Members,  413,   414,  415,   418. 
Misappropriation  of  funds,  421. 
Misdemeanor,  421. 
Name,  408,  409,  410. 
Note  for  first  assessment,  410. 
Number  of  risks,  for  granting  charter,  410. 
Number  who  may  incorporate,  408. 
Officers,  election,  term  and  bond,   415. 
Organization,  408,  429,  430. 
Penalty,  421,  423. 
Policy,  409,  410. 

Policyholders,  413,  414,  415,  418. 
Preliminary   certificate  of   authority,   409. 
Premiums,  410,  414,  415,  418. 
Profit  or  saving  to  members,  418. 
Repeal  of  Chapter   10,  Title  71,  427. 
Revocation  of  license,  411,  420,  423. 
Reserve,  418. 

Residence  of  incorporators,  409. 
Risk,  largest  single,  419,  420. 
Securities,  withdrawal  of,  426. 
Solvency  of  company,  411,  418. 
Statement,  409,  418. 

Stock  Companies,  subject  to  laws  for,  422. 
Suit  for  penalties,  423. 
Surplus   fund,   415. 
Suspension  of  license,  420,  423. 
Taxes,  425. 

Title  must  contain  the  word  "Mutual,"  408. 
Votes  of  policyholders,   413. 


Mutual  Compani« 

Accident  Companies,   123,  391  to  407. 

Burglary,  Robbery  and  Transportation  Loss  Companies,  454  to  461. 

Commissioner  shall  admit,  when,  29. 

Cyclone,  Tornado,  Hail  and  Storm  Companies    (foreign),  29,   424. 

Farmers  and  Printers,  427,  453. 

Fire  Companies,  219,  278. 

Fire,  Lightning,  Hail  and  Storm  Companies,  408  to  437. 

Inquiries,  must  answer,  42. 

Insurance  Commission  Law,  219. 

Licensed,  29. 

Life,  Health  and  Accident,  123. 

Mutual  Hail  Companies,  428  to  437. 

Mutual  Life  Insurance  Companies,  152  to   169. 

Printers'  Mutual  Fire  and  Storm  Associations,  426,  451,  452,  453. 

Taxes,  exempt  from  occupation,  278. 

Workmen's   Compensation,  380. 

Mutual  Hail  Insurance  Companies,  428  to  437 — 
Annual    statement,   436. 
Application  for  preliminary  permit,  429. 
Application  for  charter,   430,   431. 
Assessments,  429,  430. 
Attorney  General,  434,  436. 
Board  of  Directors,  432,  435. 
Bond  of  officers,  432. 
By-laws,  432. 


262  INDEX. 

Mutual  Hail  Insurance  Companies  428  to  437 — Continued. 
Certificate  of  authority,  429,  430. 
Deposits,  434. 
Directors,   431,    432,   435. 
Dividend,  433. 
Examination,  436. 
Expenses,  433,  435,  437. 
Fees,  431,  437. 
Funds,  434. 

Interest  on  investments,  434. 
Investment,  434,  436. 
Liability  of  policyholder,  430. 
Losses,  433,  434,  436. 
Name,  431. 

Note  for  assessment,  429,  430,  433. 
Number  of  applicants,  430. 
Number  of  counties,  430. 
Officers,  431. 

Organization,  407,  408,  409,  411,  428,  429,  430,  432. 
Place   of   office,   431. 
Policy,   412,   433. 
Policyholder,   433. 

Preliminary   certificate  of  authority,   429. 
Premium,   430,   433,   435,   436. 
Rates,   435. 
Reserve  fund,  434. 

Secretary  of   State,   shall   file  charter,   430. 
Settlement  of  losses,  433. 
Suit  on  premium  note,  430,  433. 
Title  must  contain  word  "Mutual,"  428. 

Mutual  Life  Insurance  Companies,  152  to  169 — 
Agents,  165. 
Annual   report,    164. 
Apportionment  of  surplus,   159. 
Bonds  of  officers,  153. 
Borrow  money,  155,  163. 
Business  confined  to  Texas,   160. 
By-laws,    153. 

Cash  value  of  policy,    163. 
Certificate  of  authority,    152,   164,    165,    167. 
Charter,   152. 

Contract  between  company  and  agent,   165. 
Debts,   155,    168. 

Default  in  premium  payment,  163. 
Deposits,   98  to   112,    154. 
Directors,   152,   153,   154,   161. 
Dividends,  159. 
Examination,  153,  166,  167. 
Expenses,   157. 
Fees,   164. 

Felony;  officer  or  director,  154. 
Funds,  where  deposited,   154. 
Investments  and  loans,  154,  157. 
Loan  on  policy,   157,   163. 
Medical   examination,    161. 
Name,  152. 

Net  premium  computed,    157. 
Officers,  153,   154,  161. 
Organization,   152. 
Paid  up  insurance,  163. 


INDEX.  263 

Mutual  Life  Insurance  Companies,  152  to  169 — Continued. 
Penalties,   154,   161. 
Policies,  152,   156,  160,   162,   163. 
Policy  form  prescribed,  160. 
Policyholders'  loans,   157,   163. 
Policyholders'  meetings,   153,   167. 
Preliminary  certificate  of   authority,    152. 
Preliminary  term  insurance,   157. 
Premiums,   157,   159,   162,   163. 
Real  estate  holdings,  154. 
Receiver,   167. 

Registration  of  policies,  98  to  112. 
Reinsurance,    167. 

Reserve,  98,  103,  105,  106,   108,  109,  110,  112,  158,  163,   167,   168. 
Surplus  to  policyholders,   159. 
Surrender  value  of  policies,  163. 
Suspension  of  license,   167. 
Taxation,  168. 
Valuation  of  policies,   156. 
Winding  up  affairs  of  company,  167. 

Name  of  Insurance  Company — 
Casualty,  50,  224. 
Consolidated  Company,  269. 

Co-Operative  Savings  and  Contract  Loan  Companies,  611. 
Fraternal  Beneficiary  Associations,  503. 
Home  Companies,  50. 
Blue  Sky  Law,  518. 
Life,  Health  and  Accident,  69. 
Lloyds  Exchange,   576    (a). 
Mutual  Accident,  392. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  409,  410. 
Mutual  Hail  Company,  431. 
Mutual  Life  Insurance  Companies,  152. 
Reciprocal  indemnity  contracts,  440. 

Negligence — 

Workmen's  Compensation  Law,  defense  and  proof,  296. 

Net  Assets- 
Defined,  69. 

Net  Value- 
Companies  must  have  on  hand,   13. 
Policies  calculated,  12,  13,  14,  34,  40,  101,  103. 

Notice- 
Assessment  or  premium,  401. 
Claim  for  damages,  285. 
Fraternal   Benefit  Societies,  517,   521. 
Meetings,  357. 

Misrepresentation   in   policy   application,   280. 
Mutual  Accident  Companies,  397,  403. 
Premium  payment,   162,  401. 
Publication  of,  274. 
Reasonable  time,   281. 

State  Fire  Commission  shall  give,  202,  207".  211. 
Subscriber  shall  give  to  employes,  372,  374. 
Workmen's  Compensation  Law.  300,  301,  305,  339,  340,  348,  357,  373,  374. 


264:  INDEX. 

Occupation  Taxes — 

Casualty  Companies,  275  to  282. 

Fidelity,  Guaranty  and  Surety  Companies,  275  to  282. 

Fire  Companies,  275  to  282. 

Live  Stock  Companies,  275  to  282. 

No  other  shall  be  levied,  139,  278. 

Life  Companies,   137,   138,  139,   140,  141. 

General  agent,  483,  484. 

Officers — 

Annual  statement,  129,  181,  228. 

Blue  Sky  Law,  529,  531,  539,  540,  545. 

Bond  given  by,  153,  415,  432,  501. 

Casualty  Companies,  226,  246. 

Commissioner  or  clerk  cannot  be,  8. 

Commissions  cannot  be  paid  to,   111. 

Co-Operative  Savings  and  Contract  Loan  Companies,   597,   598,  618,   619. 

Directors,  chosen  by,  63,   153,  432. 

False  statement,  129,  525. 

Foreign  Companies,   121,   129. 

Fraternal   Beneficiary  Association,   487,  503,   510,   511. 

Industrial  Accident  Board,   337. 

Interest  in  purchase,  sale  or  lease  of  company,  82,   1.13,  227. 

List  of  authorized,  and  postoffice  address  filed,  539. 

Misrepresentation   of   policy,    293. 

Mutual  Accident  Companies,   395,   407. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,   410,  415. 

Mutual  Hail   Companies,  432. 

Mutual  Life  Insurance  Companies,   153,   154. 

Printers'  Mutual  Companies,  452. 

Service  of  process,  93,  246. 

Texas  Employers'  Insurance  Association,  353. 

Organization — 

Accident  Companies,  223. 

Burglary  and  Theft  Companies,  223. 

Casualty  Companies,  223. 

Companies  to  do  more  than  one  kind  of  insurance,  283. 

Co-Operative  Savings  and  Contract  Loan  Companies,   585,  682. 

Credit  Insurance  Companies,  223. 

Fidelity,  Guaranty  and  Surety  Companies,  49,  249,   250. 

Fire  Companies,  49,   50,   228. 

Fraternal    Beneficiary   Associations,    503. 

Insurance  Companies,   all   kinds,   49. 

Liability  Insurance  Companies,   223. 

Life,  Health  and  Accident  Companies,  69,  222. 

Live  Stock  Companies,  222. 

Lloyds  Exchange,  576. 

Marine   Companies,   222. 

Mutual  Assessment  Accident  Companies,  391,  393,  394. 

Mutual  Burglary,  Robbery  and  Loss  in  Transportation  Companies,  454. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  408,  409,  410,  428,  430. 

Mutual  Life  Insurance  Companies,   152. 

Printers'  Mutual  Companies,   451. 

Title  Insurance  Companies,  223. 

Penalties — 

Agent's   false  misrepresentation,   479. 

Agent's  license  revoked,  217,  473,  502,  525. 

Agents  without  license,  448  to  452,  455,  456,  463,  464,  466  to  475,  478,  479. 


INDIA.  265 

Penalties — Continued. 

Anti-trust  laws,  555,  557,  558,  561,  563,  565,  567,  568,  569,  570. 

Blue  Sky  Law,  544,  545. 

Bond  of  Fire  Insurance  Companies,  179. 

Casualty   Companies,   239. 

Co-Operative  Savings  and  Contract  Loan  Companies,  600,  606,  618,  619,  620. 

Dividends  unlawful,  264. 

Embezzlement,  481. 

Fraternal   Beneficiary  Associations,  519,  521,  525. 

Life,  fire  and  marine  insurance  laws,   150,  464. 

Lloyds  Exch;in<,M>.   579,   583. 

Misrepresentation  by  agent,  480,  482. 

Mutual  Accident  Companies,   406,   407. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  460. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  423. 

Mutual  Life  Insurance  Companies,   154,   157,    161. 

Rebates  and  discriminations,   214,   289. 

Resident  agent's  law,   473. 

State  Insurance  Commission,  201,  211,  214,  216,  217,  218. 

Surety  company  bond   improperly   canceled,   260. 

Surety  company,   for  accepting  unlicensed,  259. 

Venue  for  suits,  229. 

Workmen's  Compensation  Act,  333,  344,   382. 

Permit- 
Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  409,  410. 
Mutual  Hail   Companies,  429. 
Stock  sale,  532,  533,  534,  536,  537,  538,  542,  543. 

Personal  Property — 
Taxation,   280. 

Plate  Glass  Insurance — 

Organization   of  company,   223. 

Policies — 

Age  of  insured,  87,  88. 

Agent  cannot  change,  475. 

Application  for,  280,  281,  282,  286,  288,  393,  499. 

Casualty  Companies,  231. 

Classes  of,  100. 

Co-insurance 'clauses,   186,   187,  209. 

Consolidated  Companies,  273. 

Entire  contract,  shall  contain,   87,  286,  288. 

Extended  insurance,  87: 

Fee  for  valuing,  47. 

Fire  Companies,  188,  189,  208,  209,  214,  231. 

Foreign  Life    (may  contain),   89. 

Form  number,  100. 

Forms,  115,  116,  160,  207. 

Fraternal  Beneficiary  Associations,  489,  499,  507,  514,  515. 

Hazardous  occupations,  88. 

Indisputable  after  two  years,  87,  286. 

Installments,  table  of,  87. 

Joint,  266. 

Laws  of  Texas,  govern  contract,  283. 

Level  premium,  shall  not  be  issued,  287. 

Life,  shall  contain,  87.  • 

Life,   shall  not  contain,   88. 

Limiting  time  of  suit  upon,  88. 


266  INDEX. 

Policies — Continued. 

Loans  upon,   88,   162. 

Misrepresentation  in  application,  280,  281,  282,  294. 

Misrepresentations  of,  280,  281,  282,  293,  294. 

Mortgagor,   interest   in,   188. 

Mutilated,  102. 

Mutual  Accident  Companies,  394,  395,  401,  402,  405. 

Mutual  Hail  Insurance  Companies,  433. 

Mutual  Burglary,  Robbery  and  Loss  in  Transportation  Companies,  455. 

Mutual    Fire,   Hail,   Storm   and   Lightning   Companies,    408,   409,    412,    414, 

415,  417. 

Mutual  Life  Insurance  Companies,   152,   156,   160,   162,  163. 
Net  value  calculated,   12,   110. 
Preliminary  term,  limited  to  one  year,  160,  287. 
Premium  reduction,  84. 
Prerequisite  to  issuing,  231. 
Reciprocal   Exchange,   445,   446. 
Registration,  99,   101,   103. 
Reserve  value  of,  87. 
Representations  not  warranties,   87. 
Resident  agents,  must  be  written  through,  470  to  474. 
Surrender  value,  88,    163. 
Settlement  at  less  than  face  of,  88. 
Stipulations  contrary  to  Texas  laws,  void,  283. 
State  Treasurer's  receipt,  97. 
Suicide,  88. 

Table  of  loan  values  and  options,  87. 
Technical  provisions,  184,  185. 
Terminations,  record  of,   101. 
Valuation,   101,   156,   158. 

Valuation  by  Commissioners  of  other  States  accepted,   14. 
Valued,  a  liquidated  demand,  183. 
Venue  in  suits  on,  92. 

Word  "Mutual"  shall   appear  on  first  page  of,  408. 
Workmen's  Compensation  Act,  359,  360,   361,  364,   366,  368,  371,  373,   374, 

377,  380. 

Policy-holder — 

Agent,  liable  to,  when,  468. 

Annual  and  special  meetings,   153,   167,  396. 

Complaints  as  to  fire  insurance  rates,  210,  211. 

Defined,  68. 

Deposit,  protection,  97,  98,   125,   126,   127,  434. 

Dividends,  Life  Companies,  94,   157,   158. 

Examination  list  in  report  of,    166. 

Loans  to,  157. 

May  maintain   actions,   78,   211. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  458. 

Mutual  Fire,   Storm  and  Lightning  Companies,  413. 

Mutual  Hail  Companies,  434. 

Mutual  Life  Insurance   Companies,   153,   157,    158,   159,    162,   166,   167,    168. 

Notice  of  premium  payment,   162. 

Profit-sharing,  213,  413. 

Rates  and  schedules  of  fire  insurance,  205. 

Surplus  to,  13,  14,  33,  114,  123,  159,  171,  283. 

Policy-holders'  Fund — 

Mutual  Hail  Companies,   434. 


INDEX.  267 

Power  of  Attorney — 
Blue  Sky  Law,  544. 
Foreign  Life  Companies,   130. 
Fraternal  Beneficiary  Associations,  507. 
Reciprocal  contracts,  441. 

Powers — 

Fraternal   Beneficiary  Associations,   503,   504. 

State  Fire  Insurance  Commission,  194,  195,  201,  202,  203,  204,  205,  206,  207. 

Preliminary  Certificate  of  Authority — 
Fraternal  Benefit  Society,  503. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  409. 
Mutual  Hail  Company,  429. 
Mutual  Life  Insurance  Companies,  152,  153. 

Preliminary  Term  Policy — 

Limited  to  one  year,  160,  287. 

Mutual   Life    Insurance    Companies,    160. 

Premium  Receipts — 

Annual   statement,   137,   140,   141. 
Gross,  defined,  275. 

Report  of  collections,   137,   138,   140,   141. 
Taxation,  137,   138,   140,   141,  275,  276. 

Premium  Notes — 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  401. 
Mutual  Hail  Companies,  429,  430,  432,  433. 

Premiums — 

Collection  of,  162,  215,  458. 

Default  in  payment,  163. 

Excess  insurance,  153,  181   (4,  5,  6),  182  (4,  5,  6). 

Fire  insurance,  190,  194,  195,  201,  202,  203,  204,  205,  206,  210,  211,  215. 

Fraternal  Benefit  Society,  494,  500,  503,  514,  516. 

Grace  for  payment  of,  87. 

Gross  receipts,  defined,  275. 

Mutual  Accident  Companies,  401. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  458. 

Mutual  Hail  Companies,  429,  433,  435,  436. 

Mutual  Fire,  Storm  and  Lightning  Companies,  409,  414,  418. 

Mutual  Life  Insurance  Companies,   157,  ^62,  163. 

Notice  to  policyholder,   162. 

Payable  in  advance,  98. 

Payable  outside  the  State,  283. 

Report  of  collections,  137,  140. 

Reciprocal  Exchange,  443,  444. 

Sub-standard  risk,  110. 

Taxes,  137,  138,  275,  277,  425. 

Workmen's  Compensation,  324,  363  to  370,  380,  381,  382. 

Printers'  Mutual  Fire  and  Storm  Compani 
Annual  report,  427,  452,  453. 
Bond  of  Treasurer,  452. 
Certificate  of  authority,  452. 
Corporation  may  be  formed,  451. 
Fee  for  filing  statement,  453. 
Organization,  451. 


£68  INDEX. 

Process,  Service  of  Legal — 
Casualty  Companies,  246. 

Fidelity,  Guaranty  and  Surety  Companies,  252,  256. 
Fraternal  Beneficiary  Associations,  507,  508. 
Life  Companies   (foreign),  130,  131. 
Life,  Health  and  Accident  Companies   (home),  93. 
Surety  Company  bonds,  256. 

Profits — 

Defined,  68. 

Dividends,  84,  119,  236. 

Mutual  Accident  Companies,  396. 

Sharing,  213,  219. 


Promotion 

Blue  Sky  Law,  527,  528,  530,  533,  535,  540. 

Publication — 

Capital  stock,  notice  of  increase  or  decrease,  235,  247. 

Certificate  of  authority,  263. 

Examination  reports,  19,  520. 

Fidelity,  Guaranty  and  Surety  Companies,  reports,  250. 

Fraternal  Benefit  Society's  examination,  520. 

No  adverse,  520. 

When  and  how  made,  263,  274. 

Public  Use — 

Surety  Companies,  charged  with,  262. 

Bates  of  Fire  Insurance — 
Anti-trust  Law,  540. 

Insurance  Commission,  regulations  by,  190,  194,  195,  201,  202,  203,  206,  210, 
211,  212,  213,  215. 

Heal  Estate — 

Casualty  Companies,  241,  242. 

Fire  and  Marine  Companies,  175. 

Deposit  held  in  trust,  98. 

Holdings,  81,  154,  175,  241,  242. 

Investment  and  loans,  55,  80,  154,  175,  227,  229. 

Life  Companies'  holdings,  81,  133. 

Taxation,  91/97,  277. 

Bebates —  * 

Anti-trust  Law,  569. 
Fire  Companies,  213,  214. 
Life,  Health  and  Accident  Companies,  289,  302. 

Beceiver — 

Casualty  Companies,  233. 

Co-Operative  Savings  and  Contract  Loan  Companies,  600. 

Fidelity,  Guaranty  and  Surety  Companies,  may  act  as,  250. 

Fraternal  Benefit  Societies,  517,  518. 

Life,  Health  and  Accident  Companies,  114. 

Mutual  Life  Insurance  Companies,  167. 

Beciprocal  Indemnity  Contracts,  438  to  450 — 

Application,  number  necessary  to  begin  business,  440. 
Annual  reports,  443,  444. 


INDEX.  269 

Reciprocal  Indemnity  Contracts,  438  to  450 — Continued. 
Attorney  for  service,  441. 
Attorney  in  fact,  439,  440,  441,  442,  446,  447. 
Commercial  rating  of  subscriber,  442. 
Corporations,  may  exchange,  438,  445. 
Certificate  of  authority,  447. 
Declaration  of  attorney,  440. 
Deposit,  440. 
Dividends,  434. 
Examination,  444. 
Expenses,  444. 
Fees,  448. 

Individuals  may  exchange,  438. 
Insurance  laws  do  not  apply,  449. 
Life  insurance  cannot  be  exchanged,  438. 
Maximum  indemnity  of  single  risk,  442. 
Misdemeanor,  446. 

Name  or  title  of  exchange  office,  440. 
Office  of  attorney,  439,  440. 
Partnerships  may  be  exchanged,  438. 
Penalties,  446. 

Power  of  attorney  to  exchange  indemnity  contracts,  439,  440,. 
Policy  of  contracts,  440. 
Repealing  clause,  450. 
Reserve,  443. 
Service  of  process,  441. 
Subscribers,  438,  439,  440,  441,  442. 
Who  may  exchange,  438. 
Workmen's  Compensation,  380. 

Records — 

Agent  for  excess  insurance,  182    (6). 
Charters,  70,  394,  503. 
Commissioner  shall  keep,  23. 
Directors  shall  keep,  65. 
Fee  for  certified  copies,  47. 
Fire  losses  in  this  State,  195. 
Injuries  to  workmen,  344. 

Registration — 

Fees,  107. 

Policies,  99,  101,  103,  104,  107. 

Reincorporation— 

Fraternal  Beneficiary  Associations,  504. 

Reinsurance — 

Fidelity,  Guaranty  and  Surety  Companies,  254. 
Fire  and  Marine  Companies,  169,,  178,  182. 
Fraternal  Beneficiary  Associations,  505. 
Life,  Health  and  Accident  Companies,  83,  109. 
Mutual  Life  Insurance  Companies,  167. 
Reserve  of  50  per  cent,  457. 

Reinsurance  Reserve — 

How  calculated,  16,  35,  264. 

Mutual  Burglary  and  Robbery  Companies,  457. 


270  INDEX. 

Repealing  Clause — 

Fire  insurance  laws,  189. 
Fraternal  benefit  act,  526. 
Reciprocal  insurance  laws,  450. 
Workmen's  Compensation,  383. 

Reports  to  Governor  and  Legislature — 
Commissioner  shall  make,  25,  43. 
Send  to  other  States,  26. 

Reserve — 

Accident  and  Health  Companies,  16. 

Co-Operative  Savings  and  Contract  Loan  Companies,  592,  597,  605. 

Deposits,  98,  103,  104,  105,  106,  108,  109,  110. 

Employers'  Liability  Insurance,  388  to  390. 

Fidelity,  Guaranty  and  Surety  Companies,  16,  252. 

Fire  Companies,  16,  264. 

Fraternal  Beneficiary  Associations,  489,  495,  500,  503. 

Life  Companies,  34,  98,  103,  105,  106,   108,  109,   110. 

Manner  of  reporting  and  calculating,  388  to  390. 

Marine  and  Inland,  17,  264. 

Mutual  Accident  Companies,  401. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  457. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  418. 

Mutual  Hail  Companies,  434. 

Mutual  Life  Insurance  Companies,  163,  167,  168. 

Report  shall  be  filed,  136. 

Reciprocal  exchange,  443. 

Sub-standard  risks,  110. 

Taxation,  168. 

Value  of  policy,  87. 

Reserve  Liability  (Home  Companies) — 
How  computed,  34. 

Resident  Agents — 

Policies  must  be  written  through,  470  to  474. 

Revocation  of  License  or  Certificate — 

Fraternal  Beneficiary  Association,  507,  515,  521. 

Reciprocal  indemnity  contracts,  447. 

Mutual  Fire,  Lightning,  Hail  and  Storm  Companies,  420,  423. 

Life  Insurance  Companies,  143. 

Fire  and  Fire  and  Marine,  182   (3),  212,  216. 

Risks- 
Largest  amount  of,  181,  420. 
Rules  and  regulations  for  certain,  203. 
Mutual  Fire,  etc.,  single  risk,  409,  418,  419,  420. 
Must  have  not  less  than  one  hundred  separate,  409. 

Robertson  Law — 

Companies  exempted  from  investment,  146,  147. 

Failure  to  comply  with,  143,  144. 

Fraternals,  exempt,  147. 

Investments,  taxes  and  legal  process,  inclusive,  130  to  151. 

Penalties,  141,  143,  144. 


I^DEX.  271 

Salaries- 
Industrial  Accident  Board,  337. 
Insurance  Board,  193,  196. 
Life,  shall  not  pay  excessive,  85. 
Mutual  Accident  Companies,  396. 

Secretary — 

Industrial  Accident  Board,  337. 
State  Fire  Insurance  Commission,  196. 

Secretary  of  State- 
Blue  Sky  Law,  529,  530,  531,  532,   533,  536,  537,   538,  539,  541,   542,   546, 

549,  550. 
Mutual  Hail  Insurance  Company,  charter,  430. 

Securities — 

Co-Operative  Savings  and  Contract  Loan  Companies,  589,  595,  607,  614. 

Custodian  of,  107. 

Deposits,  97,  98,  103,  104,  105,  106,  108,  109,  145,  178,  227,  234,  237,  250,  254. 

Fidelity,  Guaranty  and  Surety  Companies,  252. 

Foreign  Companies,  124,  125,.  128,  178. 

How  and  where  kept,  106. 

Industrial  Companies,  118. 

Investments  and  loans,  .55,  56,  80,  240. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  456,  460. 

Record  of,  104. 

Texas  securities  defined,  133,  134. 

Transfer  to  State  Treasurer  by  Commissioner,  38,  39,  40. 

Withdrawal  of,  105,  234,  241,  244,  252,  426. 

Service  of  Process — 
Blue  Sky  Law,  544. 
Casualty  Companies,  246. 

Fidelity,  Guaranty  and  Surety  Companies,  250,  256. 
Fraternal  Beneficiary  Associations,  507,  508. 
Life  Companies,  foreign,  130,  131. 
Life,  Health  and  Accident  (home),  93. 
Lloyds  Exchange,  582. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Company,  459. 
Reciprocal  exchange,  441. 

Set  of  Books — 

Blue  Sky  Law,  541. 

Shares  of  Stock — 
Fractional,  72. 
How  divided,  54,  69. 
Number  of,  69. 
Transferable,  73. 
Voted,  72. 

Sheriff  and  Other  Peace  Officers — 

Will  serve  process  issued  by  Commissioner,  32. 

Special  or  Board  Contracts — 
Prohibited,  289. 


272  INDEX. 

State  Fire  Marshal — 

Authority  and  powers  of,  198,  199. 
Duties,   202. 
Expenses,  199. 
Selection  of,  196. 

State  Fire  Insurance  Commission — 
Action  may  be  brought  against,  211. 
Amendment  of  rates,  203,  204,  206,  210,  211. 
Appointment  and  term  of  office  of  members,  192. 
Authority  and  powers  of,  201,  202,  203,  204,  206,  207,  210,  211. 
Certificate  of  authority  to  companies,  191,  212,  216. 
Clerical  assistants,  193,  194. 
Credits  for  reduction  of  hazard,  204. 
Companies  subject  to  commission  law,  191. 
Complaints,  210,  211. 
Examination,  201. 
Expenses,  193,  194,  196,  199,  220. 
Experts  employed  by  Commission,.  202,  203,  204. 
Extension  of  credit  not  forbidden,  215. 
Fire  losses,  to  classify,  195. 
Fire  marshal,  196,  197,  198,  199,  200. 
General  basis  schedules,  194,  201,  202,  205,  206,  211. 
Hearings,  210,  211. 
Lien  does  not  render  policy  void,  208. 
Losses,  record  and  classification  of,  195. 
Members  and  term  of  office,  192,  196. 
Mutual  or  profit-sharing  companies,  219. 
Notice  of  hearings,  207,  211. 
Penalties,  201,  211,  214,  216,  217,  218. 
Policies,  establishing  uniform,  212,  213,  214,  218. 
Policyholder,  furnished  with  analysis  of  rates,  210. 
Powers  of,  194,  195,  201,  202,  203,  204,  205,  206,  207. 
Premium  collections,  215. 
Publication  of  schedules,  202. 
Public,  rates  and  schedules  open  to,  205. 
Rates  of  fire  insurance,  190,  194,  195,  201,  202,  203,  204,  206,  210,  211,  212, 

213,  215. 

Rebates  or  discriminations,  213,  214. 
Repealing  former  laws,  189,  192. 
Salaries  of  members,  193,  196. 
Secretary,  196. 

Statements  from  companies,  201. 
Suits  against,  211,  212. 
Tax  for  support  of,  220,  278. 
Testimony  given,  218. 
Unconstitutional,  if  part  of  act  is  held,  221. 

State  Treasurer — 

Bond,  in  lieu  of  securities  withdrawn  from  deposit,  254. 

Deposits,  97,  124,  125,  145,  178,  227,  236,  239,  252,  254,  257,  427. 

Duties  as  to  transfer  of  securities,  38,  39,  40. 

Fees  to  be  turned  over  to,  40. 

Interest  on  deposits,  245,  250. 

Losses  of  Surety  Companies,  paid  by,  257. 

Securities  transferred,  shall  countersign,  38,  39. 

Taxes,  138,  140,  276,  425. 

Statutes- 
Casualty  Companies,  applying  only  to,  244. 
Cumulative,  248. 


INDEX.  273 

Statutes — Continued. 

Fraternal  Beneficiary  Associations,  exempt  from  certain,  147,  151,  277,  292, 

488,  522. 

Govern 'different  kind  of  companies  alike,  290. 
Mutual  Accident  Companies,  subject  to  certain,  294,  395,  406. 
Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  governing,  422. 
Policy  contracts,  governed  by  Texas  laws,  283. 
Repealed,  189,  279,  427,  450. 
Unconstitutional,  if  held,  221,  385. 

Stock  of  Corporations,  Regulating  the  Sale  of — 
Blue  Sky  Law,  527  to  550. 

Stockholders — 

Amend  charter,  71. 

Capital  stock,  impairment  of,  172,  173. 

Casualty  Companies,  225. 

Consolidation  of  companies,  267,  268. 

Dividends  to,  84. 

Elect  directors,  59,  60,  61,  62,  70,  225. 

May  maintain  actions,  78. 

Meetings,  60,  61,  62,  70,  74,  225. 

Quorum,  62,  70. 

Records  inspected  by,  65. 

Transfer  of  stock,  73. 

Votes,  70. 

Sub-contractor — 

Workmen's  Compensation,  342. 

Subscriber  Under  Uoyds  Exchange — 
Attorney  for  service,  582. 
Attorney  in  fact,  575. 
Additional  subscribers,  580. 

Subscribers  to  Reciprocal  Contracts — 
Attorney  in  fact,  439  to  442. 
Attorney  for  service,  441. 
Commercial  rating,  442. 
Declaration,  440. 

Deficiency  of  annual  deposits,  443. 
Names  and  addresses,  444. 

Subscriber  Under  Workmen's  Compensation  Law — 

299  to  302,  305,  323  to  325,  339,  340,  342,  343,  344,  351,  352,  356  to  367, 

371  to  375,  378  to  382,  387. 
Action  against,  299  to  302,  342,  375. 
Assessment,  365,  366,  367. 
Contingent  liability  of,  364. 
Defined,  378. 

First  meeting  of  the  subscribers,  351,  352,  357. 
Groups,  distributed  into,  363,  366. 
Industrial  Accident  Board,  372. 

List  of,  filed  with  Department  of  Insurance  and  Banking,  360. 
Liability  insurance,  responsible  for,  325. 
Notice,  339,  373,  374,  387. 
Number  must  not  be  below  fifty,  359,  360. 
Physician,  323. 
Powers  of,  370. 


274  INDEX. 

Subscriber  Under  Workmen's  Compensation  Law — Continued. 
Premium,  cannot  collect,  324. 
Record  of  injuries,  344. 
Voting  power  of,  358. 
Who  may  become  a,  356,  380. 

Suits— 

Against  Commissioner,  143. 

Attorney  General  to  forfeit  charter,  411,  420,  556. 

Blue  Sky  Law,  538,  542. 

Commissioner  may  institute,  37. 

Damage  for  withdrawing  from  bond,  260. 

Fire  Commission,  211. 

Lloyds  Exchange,  582. 

Mutual  Hail  Company's  premium  notes,  430,  433. 

Penalty  for  accepting  unauthorized  surety  company,  259. 

Removal  to  Federal  court,  33. 

Suits  on  Policies — 

Life,  Health  and  Accident   (home  and  foreign),  92. 

Bond  or  any  obligation,  256. 

Bond  by  reason  of  misrepresentation,  538. 

Limitation  as  to  time,  284. 

Misrepresentation  in  application,  280,  281,  282,  286,  294. 

Nqtice  of  claim,  286. 

Surety  or  Guarantor — 

Fidelity,  Guaranty  and  Surety  Companies,  may  act  as,  250  to  253. 

Surplus  Money — 

Casualty  Companies,  240. 

Dividends,  84,  119,  159,  264. 

Fraternal  Beneficiary  Associations,  500,  516. 

How  invested,  56,  240. 

Mutual  Companies,  123,  415. 

Surplus  to  Policyholders — 

Amount  required  to  do  business,  114,  172. 

Company  must  have,  13,  14,  114. 

Foreign  Companies,  122. 

Life  Companies,  114,  159. 

Misrepresentation,  293. 

Mutual  Life  Insurance  Companies,  159. 

Requisite  before  issuance  of  certificate  of  authority,  33. 

Taxation — 

Agents,  468,  484,  485. 

Casualty  Companies,  275,  276. 

Certificate  to  State  Treasurer,  138,  276. 

Collecting  taxes,  138,  276. 

Commissioner's  duties,  138,  148. 

Co-Operative  Savings  and  Contract  Companies,  610. 

Excess  insurance,  182    (6). 

Exceptions  to  Life  Companies,  138. 

Fidelity,  Guaranty  and  Surety  Companies,  275,  276. 

Fire  Companies,  220,  275,  276,  425. 

Fraternal  Beneficiary  Associations,  277,  523. 

Gross  premiums  defined,  275. 

Gross  premiums  reported,  137,  140,  141,  275.     • 

Home  Companies,  91,  97. 


INDEX.  275 

Taxation — Continued. 

Life  Companies,  137,  138,  139,  140,  141. 

Live  Stock  Companies,  275,  276. 

Marine  and  Inland  Companies,  275,  276. 

Municipal  and  county  occupation  taxes  prohibited,  277,  278. 

Must  be  paid,  266. 

Mutual  and  Co-Operative  Fire  Companies,  exempt,  219. 

Mutual  Burglary,  Robbery  and  Transportation  Loss  Companies,  461. 

Mutual  Fire,  Hail,  Storm  and  Lightning  Companies,  425. 

Mutual  Life  Insurance  Companies,  168. 

Premium  receipts,  137,  138,  140,  141,  142,  275. 

Real  and  personal  property,  not  exempt,  278. 

Receipt  for  taxes,  138. 

Reduced  by  investments,  137,  277. 

State  Fire  Insurance  Commission,  support,  220,  278. 

State  Treasurer,  139,  140,  276,  291. 

Withdrawn  companies,  141,  142. 

Term  of  Office — 
Commissioner,  2. 
Industrial  Accident  Board,  335. 
Texas  Employers'  Board  of  Directors,  351. 
Fire  Insurance  Commission,  192. 

Texas  Employers'  Insurance  Association — 

Appeals  to  Industrial  Accident  Board,  340,  341. 

Assessments,  363  to  370. 

Attorney's  fees,  308,  341. 

By-laws,  352,  354. 

Certificate  as  to  subscribers,  360,  361,  362. 

Compensation  paid  by,  299,  305,  310,  311,  313,  314,  315,  332,  333,  339,  341, 

343,  348,  349,  386. 

Contingent  liability  of  subscriber,  364,  366,  367. 
Created,  350. 

Commissioner's  duties,  333,  360,  362,  377. 
Corporate  powers,  350,  376. 
Definition  of  association,  378. 
Directors,  351,  353,  354,  355,  357,  363,  369. 
Dividends,  363,  366,  370. 
Employes,  302,  322,  359. 
Employers,  302,  356,  357,  378. 
Expenses,  313. 
Funds,  365,  366. 

Hospital  service,  305,  306,  307,  322. 
Inspection,  371. 
Liability  for  judgment,  375. 
License,  333,  360,  362. 
Medical  aid,  305,  306,  307,  323,  338. 
Meetings,  357. 

Notice,  339,  357,  372,  373,  374,  387. 

Number  of  subscribers  and  employes,  357,  359,  361,  362. 
Officers,  353. 

Policies,  359  to  361,  364,  366,  368,  373,  374,  377,  380. 
Premiums,  324.  363  to  370,  380,  381,  382. 
Refund  of  parts  of  premiums,  381. 
Reserves,  377. 
Subscribers,  299,  300,  302,  305,  323,  324,  325,  339,  340,  342,  343,  344,  351, 

352,  356  to  367,  371  to  375,  378  to  383,  387. 
Voting  power  of  subscribers,  358. 


276  INDEX. 

Title  Insurance  Companies — 
Organization,  223. 

Tornado  Companies — 
Agents,  462  to  484. 
Capital  stock,  50,  51,  55,  57. 
Certificate  of  authority,  51. 
Charter,  49,  50,  51. 
Consolidation  of  companies,  267  to  273. 
Directors,  58,  59,  60,  61,  62,  63,  64,  65,  66. 
Dissolution  when  companies  consolidate,  272. 
Examination,  51,  52. 
Excess  insurance,  470. 
Inquiries,  must  answer,  42. 
Investments  and  loans,  55,  56. 
Laws  govern  other  companies,  290. 
Life  business,  cannot  do,  28,  96. 
Mutual,  29,  408  to  427,  451  to  453. 
Name,  49. 
Resident  agents,  470  to  474. 

Townsite  Corporations — 

Blue  Sky  Law,  531  to  532. 

Trust — 

Defined,  552. 

Penalties,  555,  557,  561,  563.  567  to  571. 

Prohibited,  554. 

Trustee — 

Fidelity,  Guaranty  and  Surety  Companies,  may  act  as,  250. 


Unauthorized  Compani< 

Excess  insurance,  182   (4,  5,  6). 

Unconstitutionality — 

Fire  Insurance  Commission  law,  221. 
Workmen's  Compensation  Law,  385. 

Vacancies — 

Commissioner,  12,  13,  16,  34,  35,  101,  103,  104,  156. 

Commissioners  of  other  States,  14. 

Fraternal  Benefit  Society,  489,  503,  514,  515,  516,  522. 

Valued  Policy — 

Liquidated  demand,  183. 

Venue — 

Anti-trust  suits,  558,  561,  571. 

Fidelity,  Guaranty  and  Surety  Company,  suit  against,  256. 

Penalty  suits,  339. 

Policy,  suits  on,  92. 

Surety  Company  bonds,  256. 

Votes— 

Policyholders  in  Mutual  Companies,  396,  413. 

Stockholders,  70. 

Subscriber  under  Workmen's  Compensation,  358. 


INDEX.  277 

Water  and  Leakage  Damage — 
Organization  of  company,  223. 

Waiver  of  the  Provisions  of  the  Laws — 
Fraternal  Benefit  Societies,  511. 
Workmen's  Compensation  Act,  300,  301,  328. 

Witness — 

Compelled  to  testify  and  give  information,  31,  565. 

Workmen's  Compensation,  296  to  387 — 
Accident  Insurance  Companies,  380. 

Action  against  employer,  299,  300,  301,  303,  331,  342,  343,  375,  382. 
Adequate  rates,  380. 
Alien  beneficiaries,  332. 
Amendment  of  previous  law,  296. 
Appointment  of  Industrial  Accident  Board,  335. 
Appeal  to  the  court,  340,  341. 

Appointment  of  Board  of  Directors  of  Association,  351. 
Assessment  levied  by  Association,  363,  364,  365,  366,  367,  368,  369,  370. 
Assignment  of  compensation  prohibited,  299. 
Assumed  risk,  no  defense,  297,  302. 
Attachment,  compensation  free  of,  299. 
Attorney's  fees,  308,  309,  310. 
Average  weekly  wages,  310,  314,  315,  317,  378. 

Beneficiaries,  299,  302,  309,  310,  311,  313,  332,  341,  343,  378,  383,  384,  386. 
By-laws  of  Association,  352,  353. 
Cases  of  necessity,  386. 
Cause  of  action,  shall  survive,  331. 
Certified  copies  of  records,  346. 
Classification  of  premiums,  363,  366,  369,  370. 
Clerical  help,  of  Industrial  Accident  Board,  337. 

Commissioner  of  Insurance  and  Banking,  333,  360,  362,  370,  380,  381. 
Compensation,  amount,  how  and  when  payable,  304  to  323,  326  to  330,  332, 

334,  338  to  343,  347  to  349,  386. 
Compensation,  shall  begin  on  the  eighth  day,  304. 
Compromise  settlements,  349. 

Contracts,  must  cover  both  compensation  and  liability,  325. 
Contributory  negligence,  no  defense,  297,  302. 
Corporate  power  of  Association,  350,  376. 

Damage  for  personal  injuries,  297,  298,  299,  300,  302,  303,  341,  343. 
Death,  302,  303,  310,  311,  312,  313,  319,  329,  331. 
Decision  of  Industrial  Accident  Board,  340,  371. 
Defense,  to  action  to  recover  damages,  what  shall  not  be  a,  297. 
Defenses  removed,  297. 
Definitions,  316,  378,  384. 

Disability,  total,  312,  314,  316,  317,  327,  329. 
Disability,  partial,  312,  315,  316,  317,  327. 
Disputed  claim,  340. 

Dividends,  paid  by  Association,  363,  366,  370. 
Domestic  servants  not  subject  to  Act,  298. 
Emergency,  cases  of  necessity.  386. 

Employer,  299,  300,  302,  303,  324,  325,  336,  342,  344,  356,  357,  372,  378. 
Employment,  of  not  more  than  three  employes,  298. 
Employer  of  labor  member  of  Board,  336. 
Employes,  299  to  329,  334,  338  to  344,  349,  358  to  361,  372  to  375,  378,  379, 

381,  382,  383,  385,  386. 
Examination  of  injured  employe,  319. 
Exemptions  from  Workmen's  Compensation  Law,  298. 
Exemplary  damages,  303,  375. 


278  INDEX. 

Workmen's  Compensation,  299  to  387 — Continued. 
Expenses  of  Industrial  Accident  Board,  337. 
Failure  to  promptly  pay  compensation,  333,  341. 
Farm  laborers,  not  subject  to  Act,  298. 
Fees  of  Board,  346. 

Fellow  servant's  negligence,  no  defense,  297,  302. 
Filing  claim  for  compensation,  339. 
First  week,  304,  305. 
Funeral  benefit,  313. 
Garnishment,  compensation  free  of,  299. 
Guardian,  of  minor,  or  mentally  incompetent,  327. 
Hernia,  319. 

Hospital  services,  304  to  307. 

Industrial  Accident  Board,  321,  329,  330,  335  to  349,  381,  384. 
Injuries,  297  to  305,  316  to  320,  339,  344,  371,  374. 
Injured  employe,  298  to  307,  310  to  315,  317,  318,  320,  322,  323,  325  to  327, 

329,  331,  334,  338,  341,  342,  343,  344,  349,  372,  378,  386. 
Injured  outside  of  State,  334. 
Insurance  companies,  380. 
Judgment,  375. 

Liability  insurance  companies,  380. 

License  to  Texas  Employers'  Insurance  Association,  333,  360,  362. 
Lump  sum  payment,  329. 
Members  of  Industrial  Accident  Board,  336. 
Medical  aid,  304  to  307,  319. 
Medicine,  304  to  308. 

Meeting  of  the  Board  of  Directors  of  the  Association,  352,  357,  358. 
Minor  or  mentally  incompetent  employe,  326,  327. 
Misrepresentation  of  pay  roll,  382. 
Monthly  or  quarterly  payments,  349. 
Mutual  or  contingent  liability,  364,  366. 
Mutual  and  Reciprocal  Insurance  Associations,  380. 
Negligence,  297,  302. 
No  legal  beneficiary,  313. 
Non-subscriber  employer,  302. 
Notice  of  meeting  to  subscribers,  357. 
Notice  of  injury,  305,  339,  340. 

Notice  of  right  of  action  or  waiver  of  same,  300,  301. 
Notice  to  Board  by  subscribers,  372. 
Notice  of  suspensions  of  payments  of  compensation,  348. 
Notice  to  employes,  373,  374. 

Number  of  subscribers  and  employes,  360,  361,  362,  380. 
Officers  and  offices  of  Industrial  Accident  Board,  337. 
Officers  of  a  subscriber,  379. 
Operation  demanded,  319,  322. 
Partial  incapacity,  312,  315,  316,  317,  319,  327. 
Penalty,  333,  344,  382. 
Physician,  305,  306,  319,  323,  338. 

Policies,  359  to  361,  364,  366,  368,  371,  373,  374,  376,  380. 
Power  and  rules  of  Industrial  Accident  Board,  306  to  308,  321,  329,  330, 

338  to  341,  343,  346,  347,  349. 
Period  to  pay  compensation,  304,  310  to  317. 
Premiums,  324,  363  to  370,  380,  381,  382. 
Quorum  of  Board,  345. 
Railway  employes,  exempt,  298. 
Representatives  of  deceased  employes,  299,  302,  303. 
Recovery  of  exemplary  damages,  303. 
Record  of  injuries  to  workmen,  344. 
Refund  of  part  of  premium,  381. 
Refusal  of  employe  of  suitable  employment,  318. 
Regulations  and  rules  for  the  condition  of  plants,  371. 


INDEX.  279 

Workmen's  Compensation,  299  to  387 — Continued. 
Repealing  clause,  383. 
Report  of  injury  to  employe,  344,  390. 
Reserves  of  Association,  380. 
Revocation  of  license,  333. 

Salaries  of  members  of  Industrial  Accident  Board,  337. 
Specified  injuries,  317,  318. 
Seal  of  Board,  345. 
Subcontractor  of  subscriber,  342. 
Subscriber,  299,  302,  305,  306,  308,  310,  314,  315,  322,  323,  332,  333,  338  to 

341,  343,  348  to  378,  380  to  383,  386,  387. 
Subsequent  injury,  320. 
Texas  Employers'  Insurance  Association,  299,  302,  305,  306,  308,  310,  314, 

315,  322,  323,  332,  333,  338  to  341,  343,  348  to  378,  380  to  383,  386,  387. 
Total  incapacity,  312,  314,  316,  317,  327,  329. 
Unconstitutionality  of  part  of  the  law,  385. 
Unearned  premium,  381. 
Vacancies,  how  filled,  354. 
Voting  power  of  subscribers,  348. 
Waiver  of  employe's  rights,  300,  301,  328. 
Weekly  payment  of  compensation,  304,  305,  310,  311,  314,  315,  317,  319. 


Texas,   Laws 


468972  I    HG8621 
statutes         T4 


Insuran< 


e  laws* 


1921 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


